Thai stocks recovered strongly on Monday after listed companies reported excellent second-quarter performances last week, and the number of daily new Covid-19 infections began to decline.
Analysts speculated that foreign capital will start flowing into the Thai bourse as positive investment data from Thailand Focus, an annual investment virtual conference scheduled for tomorrow, will help lift investor confidence.
The SET Index yesterday rose 1.86% to close at 1,582.07 points with trade worth 114.6 billion baht.
The market was dominated by large-cap stocks such as Kasikornbank, Bangkok Bank, CP ALL, Siam Commercial Bank, and PTT Plc.
Last week, SET-listed companies reported a total net profit of 275.68 billion baht for the second quarter, up 119% from the same period last year and up 4% from the previous quarter, according to Maybank Kim Eng Securities.
According to the broker, the majority of businesses with strong profit growth in the second quarter of 2021 were in export-related industries that are benefiting from the pandemic, such as logistics, shipping, automotive, steel, petrochemicals, agriculture, energy, and medicine.
Meanwhile, the industry with the smallest profit margin is tourism. The outlook for the sector's profit growth remains negative for the third quarter as the worsening pandemic and prolonged lockdown continues to dim the prospect of success for the country's reopening plan.
"Considering the current situation, we decided to downgrade our earnings forecast of SET-listed companies to 957 billion baht and earnings per share [EPS] forecast to 83.6 from the previous 87.0 baht per share," said an analyst at Maybank Kim Eng. "We also slashed our year-end SET Index target to 1,660 from 1,700."
However, as the pandemic situation appears to be improving, an analyst at KTBST Securities has recommended investing in export stocks, and equities that will benefit from the reopening plan.
The analyst believes the economy will recover in the medium term and recommended buying Airports of Thailand, Kasikornbank, Home Product Center, WICE Logistics and Team Precision.
KTBST Securities executive vice-president Mongkol Puangpetra said Thailand's plan to reopen the country in September was unlikely to succeed as the government had failed to meet its vaccination target of 550,000 doses per day.
However, he expected the country would be able to reopen in November or December, and believed the switch of vaccine from Sinovac to AstraZeneca, which is clinically more effective, will help cut the number of infections and lift the economy out of its slump.
Mr Mongkol said if the government could increase the vaccination rate to 350,000 doses per day, 50 million people would be inoculated by the end of this year, which would give tourism and tourism-related stocks a better chance of recovery.
