Tisco Asset Management expects the Stock Exchange of Thailand (SET) Index to hit 1,400 points this year, with a market recovery on the cards for the second half of this year if the country's political problems can be resolved in the first half.
Komsorn Prakobphol, senior strategist at Tisco Asset Management, said the company maintains its target for the SET Index at 1,400 points this year. If the prolonged political protests ease in the first half, the stock market is expected to rebound in the latter half, Komsorn said.
The political unrest could cause the SET to see volatile movement in a narrow range, however, as the stock market has priced in the news. Capital continues flowing out gradually, with some thin buying. Export-oriented stocks remain attractive due to the global economic recovery, the strategist said.
The Thai stock market’s price-to-earnings ratio is at 13 times, above Asian stock markets’ average of 11.5 times.
“Our stock market has been trading at higher prices than other markets in Asia; it’s not cheap. However, export-oriented stocks remain attractive as they depend on external factors,” Komsorn said.
Picha Ratanatam, head of wealth management at Tisco Asset Management, said the Thai economy was expected to contract by 0.7 per cent in the first quarter of this year, given the political unrest. The economy is projected to grow 2.5 per cent for the whole of 2013 if the political situation is not prolonged.
When the next government is formed, it may lack investment stimulus, as it will be under pressure to make reform its first priority. Therefore, it may not be able to set policies to invest in big projects. Private investment is also likely to slow, given the lack of appointments to the Board of Investment committee.
“Thai [gross domestic product] has a chance to grow 3 per cent. On the contrary, if the political situation continues to be marred by violence, GDP may be able to grow by only 2 per cent, on exports,” Picha said.