Investors are being advised to buy and hold oil and high-dividend stocks as well as securities related to domestic consumption to avoid fluctuations from negative global factors such as the Israel-Hamas war, according to analysts.
Stocks related to oil, domestic consumption and those that offer high dividends are recommended as buys because the Middle East conflict should have a positive effect on them, while the conflagration could spread to other parts of the world as allies take sides, said brokerages.
While the duration and intensity of the war are unknown, high oil prices are expected to put pressure on corporate costs, said analysts. However, some types of stocks are less affected by external factors, or they may benefit from the conflict and remain at cheap prices, said brokerages.
The Stock Exchange of Thailand (SET) index tumbled to a low of 1,416 points, its lowest level in two years and 11 months, on Oct 16 based on fears the war would spread. The market rebounded on Tuesday as investors rushed to buy cheap stocks, said Asia Plus Securities (ASPS).
Daol Securities said investors still need to monitor the situation in the Middle East, though the leaders of many countries "do not want the conflict to escalate".
"The direction of the stock market depends on the level of violence in the Israel-Hamas conflict. So far, most global markets still believe it will not be severe," said the brokerage.
Given the volatility, Daol recommends investors hold cash or be ready to buy or sell according to the daily situation. The key support level of the Thai index is 1,420 points.
Stocks that face few risks from the war and have fallen in price, such as Ngern Tid Lor (TIDLOR), M T C Industrial (MTC) and Siam Commercial Bank (SCB) are also recommended by Daol Securities. High-dividend stocks, notably PTT, Supalai (SPALI), and Don Muang Tollway (DMT), are also recommended to hold.
ASPS recommends "buying and holding" domestic stocks to avoid fluctuations from external factors, with top picks including WHA Corporation (WHA), Erawan Group (ERW), Central Pattana (CPN), Central Retail Corporation (CRC), and Thai Oil (TOP).
Wilasinee Boonmasungsong, research director of Globlex Securities (GBS), said the Thai bourse would fluctuate this week amid concerns about the war and the impact on the global economy.
JPMorgan Chase recently warned the conflict could place the global economy at its most dangerous point in decades, with the war in Ukraine ongoing. Hamas attacks on Israel could affect energy and food markets, global trade and geopolitical relations, said the firm.
GBS expects the SET index to vary from 1,400-1,450 points this week, and recommends stocks highlighted by IAA Consensus, such as Advanced Info Service (ADVANC), Airports of Thailand (AOT), Bangkok Bank (BBL), CP All, and SCB.
