The first quarter of 2021 will see stock market growth driven by fund inflows, high foreign reserves and strong investor sentiment in Thailand and its listed firms, says Asia Plus Securities (ASPS).
ASPS recommends investing in large-cap firms with fundamentally sound stocks and high dividends, while diversifying asset classes as an investment strategy.
The securities firm assessed overall investment in the first quarter of 2021, expecting continuity of fund flows from both direct and indirect investment supporting the Thai bourse.
However, the new wave of Covid-19 presents a major risk to investors, and diversifying into global stocks benefiting from the pandemic remains an attractive move.
ASPS vice-president Terdsak Thaweethiratham said the Thai economy in 2021 is expected to grow by 4.1% from the year before, thanks to several economic drivers gradually recovering.
Profits of listed companies in 2021 are estimated at 719 billion baht or 65.04 baht per share, growing 38.1% from last year.
However, a new outbreak that began late last year is considered more severe than the first wave, forcing the government to take measures to control the disease that will hamper business operations from retail to tourism.
The lockdown may cause another GDP contraction in the first quarter of this year, and will affect listed firms' earnings estimates for 2021, said ASPS.
Mr Terdsak said the government has already prepared a budget of around 1.7 trillion baht including loans from the end of October 2020, aiming to support economic growth and cope with the Covid-19 slowdown.
He said 2021 should see both foreign direct investment through the Board of Investment and indirect investment flowing into the stock and bond markets, driven by the policies of incoming US President Joe Biden to increase corporate taxes and the minimum wage, which could cause US firms to invest overseas.
The baht may also continue to appreciate, supporting high foreign exchange profits, including liquidity that is overflowing into the system, said ASPS.
The SET Index target assessed under the market earning yield gap level of 3.7% is currently at 1,550 points, and the next SET index target is 1,626 points, based on a market earning yield gap of 3.5%, said the brokerage.