TISCO Securities expects Thai stocks to recover. Waiting for policy opening! Maintaining the year-end target of 1,500 points

July 2, 2024 – Mr. Apichart Phupanardkul, Senior Director of CISA Strategic Analysis Department, TISCO Securities Company Limited revealed that the Thai stock market in the first half of the year continued to move worse than the global stock market since last year. Since the beginning of the year to the present, the Thai Stock Exchange Index (SET Index) has fallen by about 8%, while the MSCI World Index has risen by 10% because Thai stocks are under pressure from the 2024 budget, which has been delayed by up to 7 months, which has led to a decline in the growth of the Thai economy. The growth forecast for the Thai economy has been continuously lowered. In contrast to other emerging market countries, most of the GDP has begun to show an upward trend.

In addition to the uncertainty about the country's political factors. This further aggravates investor confidence. Especially from the perspective of foreign investors, who have sold more than 110 billion baht of net Thai stocks this year, while the technical picture continues to trend in a zigzag downward direction as long as the SET index has not yet been able to recover back to the 1,330 and 1,350 levels, respectively.

With the Move Forward dissolution case, the Constitutional Court has scheduled a new hearing for July 3 and has set a date for the parties to appear and examine the evidence for July 9. As for the PM Sitha case, the Constitutional Court has ordered additional evidence to be presented and has set a new hearing for July 10. So if there is no further investigation or additional evidence, both cases are expected to be cleared up by mid-July at the earliest but if there is an investigation or additional evidence is required. It will take longer. This will continue to pressure the market.

However, TISCO Securities maintains the same view that uncertainty over PM Sita is the issue that has the most weight in weighing on the market. Because in the worst case scenario, the Constitutional Court ruling will give PM Sita his resignation. It will lead to a change in the PM. The entire cabinet and it will take at least two months to form the new government. In addition to the disruption of the government. There is also uncertainty over the policies of the new government. This will inevitably affect foreign confidence and the economic situation.

In conclusion, the Thai stock market may still not be able to swing far. The short-term upside opportunity in the market is still limited due to the uncertain political factors in the country. The technical picture of the SET index is still in a zigzag downtrend. But at the same time, the downside opportunity in the market may not be large. This is because the Thai stock market is already a stock market that has risen less than other markets (Laggard) and the valuation level of Thai stocks is low. The forward price-to-earnings ratio (12Mcf/d) is only 13.4 times, the market-to-book-value (PBV) ratio is 1.2 times, and the dividend yield is above 3.5%.

If there is political clarity, especially in the case of Ms. Sita and in the case of TISCO Securities, it is believed that Prime Minister Sita will continue in her position. The Thai stock market is expected to recover. TISCO Securities still believes that the Thai stock market is likely to recover in the second half of the year after economic growth is expected to accelerate from fiscal spending after the previously postponed 2024 budget accelerated the spending process and the gradual introduction of various measures by the government to stimulate the economy in the short term. Along with measures to boost the capital market including strict control on short selling, such as the height meter, and encouraging investment savings. By adjusting the TESG terms to be more attractive to investors, this is expected to be beneficial for the market in the second half of the year. TISCO Securities maintains its SET index target at the end of this year at 1,500 points (based on Fwd.PER at 16.6 times and SET EPS for next year at 90.5 baht).

However, the top stocks in July TISCO Securities focuses on large-cap blue chips that are expected to be TESG's investment targets, including AOT, BDMS, CPALL, and PTT, as well as stocks that are expected to have a good balance sheet in the second quarter of 2024 and stocks that have a chance to be repurchased. (Covering short positions) After taking strict measures to control short selling, we recommend AAI, AWC, CBG, and CPF, and thus the outstanding stocks of TISCO Securities this month. They are AAI, AOT, AWC, BDMS, CBG, CPALL, CPF, and PTT, and the important support levels are located at 1300, 1280, and 1250 points respectively, and the important resistance levels of the SET index this month are located at 1330 points and 1350-1360 points respectively.