Phatra sees silver lining for banking sector
Most investors believe last week's bloodless coup will reduce political risks and induce positive growth, while banking-sector stocks are currently the most preferred, Phatra Securities Plc's latest survey has found.
The securities firm said that almost 90 per cent of respondents believed political risks would decline following the coup, and one-third of those said they thought such risks would drop sharply. However, many investors also thought the outlook for public infrastructure spending had deteriorated, although Phatra said it did not subscribe to this view."We respectfully disagree. Due to the 'streamlined' administration procedure and necessity to ensure public support, we think the new administration is more likely actually to boost fiscal spending than would otherwise be the case," the firm said in a report. Phatra said investors had become more positive in regard to the immediate outlook for growth. The proportion of respondents who believe GDP growth will exceed 4 per cent this year increased to 48 per cent, from 29 per cent earlier. The securities firm also said that for the first time since it began the survey five months ago, oil and gas was no longer the most preferred investment sector. "Conversely, banking is now the most preferred sector," said the Phatra report. "Building materials and transport also saw significant improvements in their share of the vote. This is despite investor caution over the former, due to the outlook for government spending. The common denominator is that both should benefit from lower oil prices." However, Phatra said a positive big picture had yet to be reflected in better earnings expectations. Most respondents still believe the outlook for corporate earnings will deteriorate, but Phatra again disagrees. "This seems unlikely, especially if we are right about the outlook for public spending, and we enjoy a prolonged period of lower oil prices. There is room for positive surprises here. This should be reflected in better equity performance, all other things being equal," said Phatra.
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