The investment atmosphere for Thai stocks is likely to remain downbeat this month following the recent US interest rate hike that could exacerbate the banking crisis in that nation, says Tisco Securities.
Following the decision by the Federal Reserve to raise interest rates by 0.25% on May 3, investors need to monitor the impact on regional US banks as some are reported to be weak, said Apichart Phubancherdkul, Tisco's head of strategy research.
"Investment conditions in May are not bright. There are risk factors that need to be closely watched, such as how US banks are going to be affected by the Fed's interest rate policy," he said.
"There is other US economic data that needs to be monitored, such as inflation and labour market figures."
The outlook for US interest rates going forward may have to wait until the next Fed meeting in mid-June, when the new dot plot chart that records each Fed official's projection for the central bank's key short-term interest rate will be revealed, said Mr Apichart.
"The market is increasingly concerned about slowing inflation because it becomes harder for investors to predict future interest rates, which might be different from what investors forecast, especially if the Fed decides to cut rates later this year," he said.
Mr Apichart said based on statistics from the past 40 years, when the market anticipates interest rates are near a peak or at the end of a rising cycle, stock markets usually rise.
"What requires care in the next stage is when the Fed interest rate cycle starts to reverse downward. This is often when economic conditions in the US are getting bad," he said.
Tisco recommends investing in stocks with good fundamentals, which should support investment portfolios during times of uncertainty.
In the first quarter of 2023, Bloomberg Consensus expects Thai SET-listed companies to report total net profit of 198 billion baht, an increase of 12% year-on-year and 36% quarter-on-quarter.
All listed banks reported their financial results, recording a net profit of 56.9 billion baht, up 14% year-on-year and 47% from the previous quarter.
The industrial sector is expected to have good profit growth both year-on-year and quarter-on-quarter.
Energy stocks are likely to post 16% profit growth year-on-year and 113% quarter-on-quarter, according to Tisco. Mr Apichart expects net profit growth of 57% year-on-year for petrochemical companies, improving significantly from a net loss recorded in the previous quarter.
Regarding the general election on May 14, Tisco Securities believes if one political party wins the majority of votes, it should lead to an improvement in investor confidence.
The key support level for the Stock Exchange of Thailand (SET) Index this month is 1,500-1,520 points, and the key resistance levels are 1,570, 1,600 and 1,615 points, said Mr Apichart.