Thai stocks dampened by US interest rate hike concerns

Thai stocks are projected to face a challenging investment environment in the coming month due to the potential negative impact of the recent US interest rate hike on regional US banks. Tisco Securities has expressed concerns over the situation, with Apichart Phubancherdkul, Tisco’s head of strategy research, stating that “investment conditions in May are not bright”.

The US Federal Reserve decided to raise interest rates by 0.25% on May 3, a move that may further exacerbate the ongoing banking crisis in the US. Investors are advised to keep a close watch on how US banks will react to this change in policy, as well as monitor other aspects of US economic data such as inflation and labour market figures.

Apichart noted that the next key event for US interest rates would likely occur during the upcoming mid-June Fed meeting, when the new dot plot chart, which records projections for the central bank’s key short-term interest rate by each Federal Reserve official, will be unveiled.

For the time being, Tisco Securities recommends that investors concentrate on stocks with strong fundamentals to support their investment portfolios amid the current uncertainty. In the first quarter of 2023, Bloomberg Consensus anticipates that Thai SET-listed companies will report a total net profit of 198 billion baht (US$6.3 billion), marking an increase of 12% year-on-year and 36% quarter-on-quarter.

The industrial sector is predicted to experience solid profit growth both on a yearly and quarterly basis. Energy stocks, in particular, are expected to post 16% profit growth year-on-year and 113% quarter-on-quarter, according to Tisco.

The general election taking place on May 14 may serve as a turning point for investor confidence, especially if one political party emerges with a clear majority. Apichart has identified key support and resistance levels for the Stock Exchange of Thailand (SET) Index throughout the month, with the main support range sitting between 1,500 and 1,520 points, while resistance levels are set at 1,570, 1,600, and 1,615 points, reports Bangkok Post.