The Thai economy can expect 3.2% growth and a clear recovery in 2022, while total profits of listed companies are projected to rise to 921 billion baht, up 8.8% from this year, according to Asia Plus Securities (ASPS).
The SET Index is projected to continue rising to 1,816 points next year, said Therdsak Thaveeteeratham, executive vice-president of ASPS.
A few negative factors are pressuring market sentiment in the fourth quarter, he said. Investors should monitor the Thai government's control of the spread of Covid-19, progress in vaccination rollouts, and handling of flooding in several provinces, said Mr Therdsak.
Profits of listed companies in the second half this year are likely to decline, especially during the third quarter, he said.
However, even if the performance of listed companies turns out to be poor, it will not heavily impact market sentiment because these factors are all expected by investors and the impact is already priced in, said Mr Therdsak.
In addition, investors should follow the Stock Exchange of Thailand's decision to adopt the free float market-adjusted capitalisation method in the calculation criteria for shares in the SET50 and SET100 indices, he said.
Mr Therdsak said if the SET implements the new calculation criteria for the SET50 and SET100 indices, it will create short-term volatility in the indices because some stocks could be added or eliminated.
For external factors, investors should monitor global concerns over China Evergrande Group's debt default and the Federal Reserve's decision on the tapering of its quantitative easing, he said.
ASPS expects the Thai economy in the third quarter this year to contract by 5.3% year-on-year before starting a recovery in the fourth quarter from the gradual easing of lockdown measures, an increase in economic activities, and the government's upcoming economic stimulus packages.
As the number of daily new infections continues to drop while the vaccination rate picks up, Mr Therdsak forecasts a positive outlook for a Thai economic recovery next year, predicting GDP growth of 3.2%.
"For an investment strategy in the fourth quarter, we recommend stockpiling stocks with two themes. The first group includes stocks expected to benefit from the restart of the economy, while the second includes stocks expected to benefit from the restructuring of the SET50 and SET100 indices," he said.
Mr Therdsak also recommended diversifying investments in various sectors and selectively buying stocks that are industry leaders, such as Advanced Info Service, Aeon Thana Sinsap, CP All, Central Pattana, Kasikornbank and Thai Oil.
For foreign stocks, he recommended markets with positive factors such as Europe and Japan, as well as businesses with a clear vision for growth related to clean energy, electric vehicles (EVs) and other innovations with high potential for long-term growth. This includes manufacturers and designers of processors or electronic components used for the development of clean energy and EVs.