China's reopening, continued inflows of foreign funds, and anticipated spending for Thailand's national election scheduled for early May should put the Thai stock market in the spotlight in the first half this year, according to analysts.
Visit Ongpipattanakul, managing director of Trinity Securities, said this year capital inflows are likely to happen quickly as China reopening rejuvenates the Thai tourism sector and encourages economic growth.
Trinity projects China allowing cross-border travel to support Thai GDP expansion of US$3.4-4 billion this year, leading to GDP growth of 3.5-3.8%.
The Stock Exchange of Thailand (SET) index is approaching 1,700 points despite several risk factors such as rising interest rates, persistently high inflation, the Russia-Ukraine war and other geopolitical conflicts, he said.
The election should also improve market sentiment, said Mr Visit. Based on the past 12 Thai elections since 1988, the Thai bourse averages a yield of 5.2% in the three months leading up to the election, said the brokerage.
A risk factor is the Federal Reserve reversing its interest rate hikes, as Trinity forecasts the Fed will reduce the policy rate by the end of this year. Such a move would cause the SET index to swing by about 300 points this year, according to Trinity.
"Thai stocks should give investors the best returns. We recommend stocks in the banking, retail, power plant, infrastructure fund, industrial estate and telecom sectors," said Mr Visit.
"The Thai bourse should perform better in the first half than the second half."
For asset allocation in 2023, the brokerage recommends increasing investment weight in global fixed income to 25-30%, while allotting 20-25% to emerging market stocks, with 10-15% focused on Chinese, Vietnamese and Thai stocks. Investors are suggested to hold 25-30% cash, 5-10% gold and 5% European and Japanese stocks, according to Trinity.
Asia Plus Securities (ASPS) forecasts the SET index to move in a range of 1,590-1,700 points in 2023, driven by the domestic economic recovery, strong profit growth of listed firms and foreign fund flows.
"The market has good sentiment in the first half based on expectations of new economic policies ahead of the new election," said ASPS executive vice-president Therdsak Thaveeteeratham.
For investment strategies, ASPS recommends three themes. The first is domestic consumption, with Sino-Thai Engineering and Construction (STEC), COM7 and Gulf Energy Development (GULF) suggested.
The second theme is China, with recommended stocks including Airports of Thailand (AOT), while dividends are the third theme, with a focus on AP (Thailand) and Asia Sermkij Leasing (ASK).
Four factors should support the stock index rising in the first half, he said, led by the Thai economic expansion. 2023 GDP growth of 3.8% is remarkable when compared with 2.6% expansion for the global economy, said Mr Therdsak.
Secondly, profit of listed companies is forecast at 1.27 trillion baht this year, representing earnings of 99.2 baht per share and growth of 6%. Foreign capital inflows should also continue thanks to baht stability, he said.
Lastly, there are positive expectations for new policies following the election, said Mr Therdsak.
However, pressing factors include a potential recession of the US and European economies, as well as a rate hike by the Bank of Thailand that will narrow the gap between stock market returns and bond yields, he said.
"ASPS expects the Thai central bank to raise interest rates no more than two times this year," said Mr Therdsak.
The imposition of a share sales tax, expected to be enforced from the second quarter, will affect sentiment during the rebalancing period, he said.