Kasikorn Securities (KS) has revised its SET index target for 2017 to 1,700 points, up from 1,650 points. The firm expects the index to top 1,760 points in 2018.
Prakit: Expects robust GDP growth this half
Prakit Sirivattanaket, vice-president of Kasikorn Securities, said the continuing inflow of funds that is driving the SET's rally is supported by investor belief that the Thai economy will continue growing in the second half.
"In the first half of the year, Thailand's GDP grew 3.5%, and we expect even larger growth during the second half of the year thanks to increases in exports and the tourism sector," said Mr Prakit.
The private sector has expanded significantly and is driving the recovery of non-farm income and growing domestic consumption.
The Eastern Economic Corridor (EEC) Act is progressing and is expected to attract foreign direct investment for related projects as well as support the recovery of other economic sectors, he said.
Investors hope Thailand's election will take place next year in a politically stable and peaceful environment after the departure of former Prime Minister Yingluck Shinawatra after a court last month was set to rule on her involvement in her government's costly rice pledging scheme.
In addition, Thai bond yields have hit rock bottom, which makes the equity market more attractive in comparison, said Mr Prakit.
"Brokerage houses have increased their SET index targets and share price estimates on the assumption that positive sentiment will drive market trading volume, putting the bourse over 1,700 this year. If negative factors affect market sentiment, KS estimates the market will end the year at 1,640," he said.
Factors to watch for the rest of the year include the Federal Reserve's balance sheet reduction policy and possible interest rate hikes. Conflict between North Korea and the US and the domestic election next year should also be kept on the radar.
In the short term, Mr Prakit recommends stocks like KCE, MTLS, SPALI, MCS, HMPRO and CPALL. In the medium term, investors should consider stocks that will benefit from the EEC project such as AMATA, WHA and TICON. Stocks that will post a stellar performance in 2018 include STEC and BLA, he said.
Mr Prakit said the bank's share prices dropped yesterday after the Bank of Thailand announcement on measures to control risk management stirred negative investment sentiment. The bank's fundamentals are unchanged.