InnovestX Securities expects the Thai stock market to recover in the second quarter, helped by the US cutting interest rates and a rebound in Thailand's public and private investments, with the SET index finishing at 1,550 points by year-end.
InnovestX, part of the SCB X Group, anticipates the Thai economy could expand by up to 3% this year, with the first quarter being the most challenging period.
"The optimism is partly due to the potential for relaxed financial policies in major economies such as the US, along with Thailand's planned budget disbursements," said the brokerage.
"If these disbursements are efficient, Thai GDP growth is estimated to reach 3%, spurred by increased public and private investments."
If disbursements fall short of expectations, the economy might expand by 2.5%, which could lead the Bank of Thailand to cut interest rates twice, said chief researcher Sukit Udomsirikul.
The global economy is poised for a soft landing in the second quarter, performing better than analysts initially forecast.
China is rolling out stimulus measures and if the economy meets Beijing's growth projections, Asia's economies and stock markets are expected to benefit, including Thailand, said Mr Sukit.
Head of investment strategy Sutthichai Kumworachai said InnovestX expects the Bank of Thailand to start cutting the policy rate in June.
The brokerage recommends a shift in investment weighting from developed markets to emerging markets, with new investment flows increasingly directed towards non-technology and cyclical sectors from the second quarter.
"For our long-term strategy, we recommend dollar cost averaging, especially as the Thai bourse is recovering more slowly than regional markets and stock prices are significantly undervalued," said Mr Sutthichai.
In a related development, the Stock Exchange of Thailand (SET) is holding a public hearing on additional measures to supervise short selling and program trading, aiming to tighten its supervision and buoy investor confidence.
The bourse wants to revise qualifications for securities eligible for short selling and impose an uptick rule on short selling in cases when the securities price declines.
To better regulate investors who use high-frequency trading, the bourse would require them to register.
A minimum order resting time would be imposed to slow or prevent frequent cancellations of trading orders, aiming to prevent inappropriate trading orders.
Another measure is disclosure of investors involved in inappropriate trading behaviour to all broker members to increase efficiency in supervising these investors, in line with the requirements of the Association of Securities Companies, such as reducing credit limits or requiring them to trade through specific traders.
Finally, the bourse wants to increase fines on broker members who breach the regulations or do not comply with the stricter rules and regulations.
Opinions and suggestions from stakeholders are welcomed at https://forms.gle/MAaxwe5PaRUBpwt69 until April 21, 2024.