Thailand's SET Index is expected to dive in the short term this year as investors pull out profits following a positive performance compared with regional indices over the past two months, says Asia Plus Securities (ASP).
Terdsak Taweethiratham, vice-president of ASP, said there are three scenarios for a SET Index target this year based on market conditions.
The worst case is a market earning a yield gap level of 4.10%, which means funds did not flow into the market, leading the index to target 1,415 points.
The base case sees a market earning yield gap level of 3.70%, assuming funds flow in at a PER (price per earning ratio) of 23.8 times, making the 2021 SET index target 1,550 points with an upside of 7%, which is the level ASP predicts.
In the best-case scenario, the market earning yield gap level would be 2.6-3.5%. It is considered to be the level at which funds continue to flow into the market, thus it is likely that the index will trade on a higher PER and push the index to 1,626-2,098 points.
ASP forecasts the SET Index will rise in the medium to long term. Investment strategies should focus on strong fundamental stocks that have supporting factors to boost the share price, including the price having an upside of 10% together with strong fourth-quarter profit, growing at a healthy quarterly and yearly rate.
ASP picks large stocks like Gulf Energy Development (GULF), Advanced Info Service (ADVANC) as well as high-dividend stocks such as AP (Thailand) (AP) as the target of investments in early 2021 that would benefit from fund inflows and which are strong stocks to hold when the market is volatile.
SCB Securities Research said private investment is likely to recover this year, supported by domestic economic activities and exports, which should improve in line with the global economic recovery.
Sales of seven property companies listed on the SET are likely to recover including AP, Land and Houses (LH), L.P.N. Development (LPN), Pruksa Holding (PSH), Quality Houses (QH), Sansiri (SIRI) and Supalai (SPALI) -- each expected to grow roughly 5% from 2020.
Wilasinee Boonmasungsong, vice-president for research at Globlex Securities, said investments in 2021 still require careful consideration because there are many factors pressuring businesses.
Most businesses have to switch to new operating conditions, while Covid-19 will still likely affect the overall economy and investment.
Ms Wilasinee suggested any investment strategy for 2021 must choose stocks with continued growth during this year.