Despite projecting investment optimism in the second quarter, the new government's fragile stability and the protracted Sino-US trade dispute could have an adverse impact on investment sentiment, says the Investment Analysts Association (IAA).
If political parties form a coalition government with less than 280 MPs in the lower house, government stability going forward would be at risk, said Sombat Narawuthichai, secretary-general and director of IAA.
Domestic politics remains the most important issue this year, said Mr Sombat.
"The election this time is different from the past, especially regarding the method to select the prime minister. Formation of a new government is still unclear as the two leading political parties have close vote tallies," he said.
Based on the IAA survey of analysts and fund managers, 48% expect Thailand's stock indices to gain in the second quarter, while 40% anticipate sideways movement. Some 12% expect the market will move into negative territory.
Surveyed analysts estimated the average SET index target will be at 1,689 points this quarter, with resistance and support levels projected at 1,740 and 1,583, respectively.
For 2019, analysts viewed the benchmark index will move between 1,701-1,800 points, with a year-end projection anticipated at 1,740.
Positive factors propelling investor confidence are stability of the new government, the US Federal Reserve's unchanged policy interest rate and a return of foreign fund flows into emerging stock markets, said Mr Sombat.
Factors posing pessimism include the global economic slowdown and lower than expected earnings of SET-listed companies, he said.
Average earnings per share (EPS) for 2019 is expected at 110.02 baht, with EPS growth in 2019 anticipated at 9.67%, according to IAA.
"Analysts will cut the SET index target again this year if the new government lacks stability," said Mr Sombat.
IAA's consensus stock picks for this year are AOT, CPALL, SCC and STEC.
AOT is poised to receive benefits from inbound tourist arrivals and BBL will benefit from an economic recovery and a return to the investment cycle.
Government spending and a private consumption recovery are positive factors for CPALL, while STEC is expected to benefit from its backlog of projects worth 120 billion baht.
For SCC, the company's net profit is projected to increase this year from its core business, cement price recovery and oil price stability.
For Thailand's policy interest rate, 80% of analysts say the Bank of Thailand's Monetary Policy Committee will not raise interest rate this year.