InnovestX Securities expects the Stock Exchange of Thailand (SET) index to bounce back to 1,500 points by the end of 2024, rising from around 1,300 points now, as accelerated budget disbursement and improvement in the manufacturing and tourism sectors propel an economic recovery in the latter half.
Head of investment strategies Sutthichai Kumworachai said InnovestX expects the Thai economy to expand by 2.5% this year and 3% in 2025, supported by a synchronised recovery of the global economy in the third quarter.
Many regions, notably in Europe and Asia, are clearly recovering, while the US economy is still going strong even though there are signs of a soft landing.
The US Federal Reserve could cut interest rates this year, following the lead of the European Central Bank (ECB), said Mr Sutthichai.
"A reduction in interest rates would have a positive effect on the stock market as a whole," he said.
"The Fed might cut rates twice this year and the ECB three times."
There are still risks such as the trade war between China and the US and EU, as well as uncertainties related to Thai politics, said Mr Sutthichai.
In the third quarter of 2024, there will be a shift from investing in growth stocks to value and cyclical stocks, excluding the technology group, because the global economic recovery will help to boost confidence, he said.
"Even though the Thai stock market continues to be underweight, earnings are likely to recover as political tensions subside and government disbursements accelerate," Mr Sutthichai said.
These fundamentals should allow the Thai stock market to rally and narrow the gap with the best-performing markets such as Taiwan and India in the third quarter, he said.
International politics is having a muted impact on global financial markets because the US is entering the final round of its presidential election campaign, said Mr Sutthichai.
Additional US funding to support Israel is unlikely because of tight US fiscal problems, while other countries will begin to focus on policies to stimulate their own economies rather than engaging in international politics, according to the brokerage.
InnovestX recommends investors focus on buying and selling strategies in markets that have unique investment stimulating factors, such as the US and China.
For the next 3-6 months as well as over the long term, the brokerage suggests investors gradually build a core portfolio through investments in global equity funds.
