SET takes off as analysts look for more
Thai stocks soared to a 52-week high on Thursday, showing clearer signs of the long-awaited economic recovery, while international organisations upgraded world GDP outlooks for this year, driving capital inflows to global stock markets including Thailand.
The SET index is expected to hit a key resistance level of 1,600 points soon and could penetrate 1,700 points if fund inflows continue, said analysts.
Chanchai Panthatanakij, a technical investment analyst at Asia Plus Securities (ASPS), said there are many positive factors leading the Thai stock market back to bullish territory this year, led by the global economic recovery, improvement in listed firms' performance and the economic stimulus packages.
He said the Organisation for Economic Co-operation and Development increased its estimate for global GDP from 4% to 5.6% earlier this week, while the IMF upgraded its forecast from 5.2% to 5.5%.
ASPS projects Thai GDP this year can rise 2.6%, Mr Chanchai said.
In addition to a better outlook for the global economy, the prospect of high growth in SET-listed firms this year is another factor that could attract funds to the Thai stock market.
ASPS forecasts SET-listed firms' 2020 net profits to be 746 billion baht, with earnings per share (EPS) of 70.20 baht. It expects net profits to increase by 32% in 2021.
"We found historically whenever the performance of SET-listed firms is projected for more than 30% growth, the Thai market attracts a large influx of capital," said Mr Chanchai.
In addition, most central banks are likely to continue easing their monetary policies to strengthen their economies and keep the interest rate low. These factors will also drive funds to flow into stock markets, he said.
"The index is heading into the bullish zone," said Mr Chanchai.
ASPS recommends accumulating fundamental stocks where prices are still laggard, such as Bangkok Bank (BBL), PTT and Charoen Pokphand Foods (CPF).
Kasikorn Securities forecasts Thai shares making gains, spurred by the tourism and export sectors, which make up 75% of GDP, said Sunthorn Thongthip, the company's senior vice-president.
Mr Sunthorn forecasts the SET index will reach 1,650-1,700 points at year-end, assuming 2022 EPS are at 91.5 baht and the 10-year government bond yield at 1.8%.
Thailand's EPS forecast for 2021 is about 80 baht, said Kasikorn Securities.
"The Thai stock market is the best performer in Asia. Our country's economy still depends on vaccination, with GDP dominated by tourism and exports," he said.
Mr Sunthorn's only concern next quarter is whether the US central bank would taper its quantitative easing. A tapering may cause capital to flow out of global stock markets in the second half this year as investors sell stocks and take profits.
Paiboon Nalinthrangkurn, chairman of Tisco Securities, said the US interest rate may not increase this year because the unemployment rate is still high at 6% and the US economy needs the support. The recent inflation uptick is expected to be a temporary phenomenon as the economy just sprung back from a recession.
"Global bourses are likely to be volatile in the second quarter. We expect more funds will flow into the tourism economy in the second half," said Mr Paiboon.
Kongkiat Opaswongkarn, chairman of ASPS, said the improvement in real economic figures and real investment, the number of tourists, and a recovery in the country's core revenues are more important than improvement in the stock markets.