8-8-2023 (BANGKOK) The Stock Exchange of Thailand (SET) is predicted to experience a sluggish third quarter of 2023 due to lingering political uncertainties, according to the Investment Analysts Association (IAA). The IAA has called on the new government to take action by boosting domestic consumption and addressing the issue of rising household debt.
Paiboon Nalinthrangkurn, Chairman of the IAA and Chief Executive of Tisco Securities, highlighted that the SET had declined along with global stocks in the second quarter, but its performance was among the weakest worldwide.
Nalinthrangkurn stated, “The Thai index is likely to continue to decline in the third quarter as political uncertainties persist. Currently, investors should focus on tourism-related stocks, which have strong fundamentals and attractive valuations.”
In terms of government priorities, Nalinthrangkurn emphasized the importance of stimulating domestic consumption and implementing stimulus measures to support the tourism sector. He noted that while the sector has performed well thus far, additional proactive measures are needed to boost demand.
Furthermore, the new government must address the issue of mounting household debt, which requires prompt action. Measures to stimulate investments in both the real sector and the capital market, which have experienced significant declines, are also necessary, added Nalinthrangkurn.
Given the subdued nature of the stock market, Nalinthrangkurn advised investors to consider increasing their investments in bonds. He stated, “Considering the current interest rates and the possibility of a limited hike in Thai interest rates, investors should selectively invest in low-risk bonds.”
Benjaphol Suthwanish, Head of Research at UOB Kay Hian Securities (Thailand), mentioned that a substantial rise in global oil prices could potentially benefit the Thai stock market. However, in reality, the SET index is currently moving sideways due to political concerns.
Suthwanish commented, “There is a possibility that the new prime minister will not come from the Pheu Thai Party, which currently leads the government’s formation. As long as the political deadlock remains unresolved, the SET index will likely remain stagnant.”
Asia Plus Securities highlighted that energy-related stocks in the SET index are benefiting from the increasing energy prices, as the energy sector represents a significant portion of the SET’s capitalization.
The price of WTI crude oil rose by 1.56% on Friday following Opec+’s decision to extend an output cut until the end of 2024. Saudi Arabia, a prominent member of Opec, extended the oil output cut while Russia reduced its crude oil exports.
Asia Plus Securities mentioned in a research note on Monday that the rising oil prices may offset negative sentiment on the SET index. Nevertheless, due to concerns over the political vacuum and transition, the SET index is expected to decline this week.
