ASEAN KEY DESTINATIONS
Thai exchange at 1,224 by year-end
But Nomura Securities warns further losses are possible, with the Stock Exchange of Thailand (SET) index possibly dropping to as low as 960 points, representing further downside of nearly 6 percent from Friday's close of 1,020.37.
Yet this downside is relatively limited considering current valuations of 12 times earnings and expectations by Capital Nomura that the SET index could rebound to as much as 1,224 points by the end of the year.
Terdsak Thaweethiratham, a senior vice-president of Capital Nomura, said 1,224 points would represent a market valuation of 14 times earnings, a realistic target considering that Thailand and the region are still expected to well outperform the sluggish European and US economies for the near future.
Assuming the July 3 elections and the next government is formed with minimal disruption, foreign capital can be expected to return to the local market.
Mr. Terdsak, speaking on Friday at an investor conference, said earnings per share growth is projected at 20 percent this year, albeit with some slowdown expected starting in the third quarter.
The banking sector, led by market giant Bangkok Bank, should continue to benefit from the economic expansion and rise in interest rates.
In the food sector, Thai Union Frozen Foods is recommended as a long-term investment, with its expansion into new international brands likely to reap benefits in the future. On the other hand, the hotel sector could underperform the market, including companies such as Central Plaza Hotel and Minor International.
But investment expert Nives Hemvashiravarakorn said economic growth in the second half should slow from the first, affecting the outlook of foreign investors on the Thai market.
He agreed politics remains a concern. While some short-term lift may be expected in the short term, investors may look to sit on the sidelines pending clarity on the policy of the new government.
For instance, policies to raise the minimum wage would raise labour costs, particularly small and medium-sized businesses.
Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below