Daiwa Securities Group underweighs the stock market while suggesting investors opt for communications, tourism, utilities and food groups.
“In our view, the best way to outperform the SET Index is to selectively invest in stocks and underweigh blue chips like energy and banking stocks.
“The energy sector remains short of volume and drive for prices, while the banking sector’s return from stocks at cost peaks in the current cycle. We overweigh five groups like communications, tourism, utilities and food,” Daiwa said in its note.
Based on the global financial group’s analysis of Asian stock markets, the Stock Exchange of Thailand Index is targeted at 1,450 points at the end of this year.
The economy has been slowing down with short-term political risks, it said.
Daiwa forecasts economic growth at 2.8 per cent for last year and 3.2 per cent for this year,. The political uncertainty is factored into the forecast.
A likely military coup could be a risk for the growth estimate.
Listed companies’ earnings-per-share growth is estimated at 14.5 per cent for 2013 and 13.2 per cent for 2014.
The communications group includes wireless, broadband, ICT infrastructure and satellite operators, which have made new investment with growing profit. Picks are satellite operator Thaicom and Samart Corporation.
The tourism sector, which sees a rise in visitors despite the natural disasters and political unrest, is one of the most flexible. Airports of Thailand and hotel operator Central Plaza are selected.
Utility stocks show promise amid the approved government budget in fiscal 2014.
Despite the Houses’ dissolution, government spending is expected this year.
With last year’s low base, food stocks like Charoen Pokphand Foods and Thai Union Frozen Products are tipped to stage recoveries this year.