Bangkok – Thailand’s stock market is closely tracking post-election political developments, with analysts predicting a near-term boost contingent on swift government formation. A new assessment from Bualuang Securities, released February 2, identifies key stocks poised to benefit from renewed foreign investment should political uncertainty subside. The brokerage acknowledges potential headwinds from subdued first-quarter corporate earnings but maintains a positive long-term outlook, projecting a year-end SET index target of 1,440 points if a government is established by May.
Thailand’s stock market is poised for gains in the short term following recent elections, though upside potential remains limited, according to a new assessment from Bualuang Securities. The brokerage firm projects an upper trading range of 1,350–1,370 points, as investors await clarity on government formation and policy implementation.
The analysis, released on February 2, 2024, suggests that a smooth transition to a new government could unlock further gains driven by foreign investment. “If the government is formed smoothly, valuation-driven rotation from foreign funds will further support the market,” the firm stated.
Despite the optimistic outlook, Bualuang Securities acknowledges that corporate earnings for the first quarter of 2024 may remain subdued due to policy uncertainty. However, a stable political landscape could spur a shift in investment towards value stocks in emerging markets, particularly Thailand, which currently trades at its lowest valuation in 16 years relative to global and Asian markets. This dynamic supports a positive medium-to-long-term outlook, and the firm maintains its year-end target for the SET index at 1,440 points.
A delayed government formation – potentially stretching into the fourth quarter – could see the SET index fall to 1,350 points, representing a more pessimistic scenario.
The brokerage recommends a strategy focused on accumulating high-quality value stocks and those likely to attract foreign investment flows. Key recommendations include CPN, COM7, BH, OSP, and CPALL. Additional “foreign flow targets” – stocks that have historically seen consistent inflows – are PTT, SCC, and ADVANC.
Bualuang Securities anticipates that key policy priorities of leading political parties will center around five core areas: stimulating consumption and reducing the cost of living, accelerating government investment disbursement, attracting continued foreign direct investment (FDI) through the BOI Thailand FastPass program, boosting tourism, and supporting the Thai stock market.
While acknowledging potential limitations in economic stimulus measures, the firm believes that resolving political uncertainty will be a crucial catalyst for attracting foreign capital to Thai “value stocks.” Thailand’s current price-to-earnings (P/E) ratio is 37% lower than the MSCI ACWI and 21% lower than the MSCI Asia ex Japan, marking the lowest levels in 16 years. Maintaining its 1,440-point target for the SET index, Bualuang Securities anticipates this scenario if a government is established by May.
