Stock shock! Thai stocks on the ropes, long-term prospects shine
Amidst a whirlwind of disappointing earnings, political jitters, and the looming shadow of US tariffs, Thai stocks are feeling the heat. Yet, analysts at Tisco Securities reckon there’s gold to be found for those willing to play the long game.
Apichart Phubancherdkul, Tisco’s strategy sage, voiced concerns that the Thai economy, struggling under the weight of dwindling consumption and a tottering manufacturing scene, might not even crawl to a 3% growth rate this year. Cheap imports are eating into local markets, leaving economic growth crawling at a snail’s pace.
The plot thickens with US President Donald Trump flirting with the idea of reciprocal tariffs. While Thailand slaps a rough 6% tariff on American goods, Uncle Sam levies less than 1% on Thai products. With a hefty US$40 billion trade surplus with the US in 2023, Thailand finds itself in the crosshairs, trailing only India as the most exposed to potential tariff tit-for-tat.
Investors should keep their ears to the ground as the fate of Thai-US trade hangs in the balance. Apichart urges a close watch on negotiations set to play out in the coming months.
As if that weren’t enough, corporate earnings for the final quarter of 2024 missed the mark, with 47% of firms reporting below-par figures. Meanwhile, a trifling 23% hit their goals, and 30% surpassed expectations. The Stock Exchange of Thailand (SET) is feeling the squeeze, with earnings per share dipping by 2.4% since the start of the year, perpetuating 2023’s slide.
Political drama is adding spice to the mix, as constitutional squabbles and a looming no-confidence vote against the government threaten to stir the pot further.
Despite the current maelstrom, Tisco paints a brighter picture for medium- to long-term investors. “Fundamentally sound stocks trading below fair value could be ripe for the picking,” say the analysts. Blue-chip stocks across sectors could gleam with potential as investors pivot from long-term equity funds to greener pastures in the form of Thai ESG funds.
In terms of stock picks, Tisco tips its hat to Bangkok Dusit Medical Services (BDMS), Home Product Center (HMPRO), Minor International (MINT), Krung Thai Bank (KTB), PTT, Amata Corporation (AMATA), and Supalai (SPALI), reported Bangkok Post.
For the globetrotting investor, opportunities abound with depository receipts (DRs) and fractional depository receipts (DRx) in foreign stocks. China’s latest parliamentary pow-wow hints at a strategic pivot towards boosting consumption, investment, and tech innovation.
Looking ahead, Tisco flags the SET index with a key support level at 1,150 points and sees resistance at 1,250 for this month.
Buckle up, investors—Thailand’s stock scene might be in for a wild ride, but those with an eye on the horizon could find their patience richly rewarded.
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