First-quarter net profits of SET-listed companies will likely reach an all-time high of 300 billion baht with an analyst suggesting better-than-expected quarterly earnings reports will help attract investment and sustain foreign inflows to the Thai bourse in the second half.
Tisco Securities expects banking and tourism stocks to outperform.
Apichart Phubancherdkul, head of strategy research at Tisco Securities, said the Russia-Ukraine war hit stock markets in other regions, particularly Europe, harder than the markets in Southeast Asia.
With energy stocks representing a significant portion of the market capitalisation, the Thai stock market continues to report outstanding profits and attract foreign investors who see the Thai bourse as a safe haven.
Mr Apichart said seven banks under Tisco's analysis are expected to record a total profit of 48.9 billion baht, up 11.4% from the same period last year and up 21.7% from the previous quarter, driven by loan growth and lower bad debt provision.
In addition, the resumption of local economic activities also helped increase banks' fee-based income and profits and fostered better asset quality management.
Tisco believes that large banks will likely see lower credit costs than smaller banks and also benefit from rising interest rates.
However, investors still need to monitor risks from the global economic slowdown triggered by the war and economic sanctions, higher inflation and the Federal Reserve's tightening of monetary policy that will pull liquidity out of the system from May to June.
For domestic risks, investors should also follow results from the no-confidence debate against the government in May.
For investment strategy in April, Tisco recommends holding 70% in equities as the Thai stock market remains on an uptrend and continues to record foreign inflows.
The brokerage also recommends focusing on stocks in three investment themes.
The first group include stocks to hedge against inflation and stocks expected to benefit from rising interest rates. Top pick from the group is Bangkok Bank (BBL) with a target price of 151 baht.
The second group includes stocks expected to benefit from the reopening and easing of travel restrictions such as Minor International (MINT).
The last includes stocks with supporting factors from the local economic cycle such as AP Thailand (AP) and Bangkok Chain Hospital (BCH).