MOST investment analysts are factoring in a general election before May next year, believing that if the oft-delayed poll went ahead it could help to support the earnings performance of companies listed on the Thai bourse, a survey has found.
Sombat Narawutthichai, secretary-general of Securities Analysts Association, said that most of the securities analysts surveyed estimated the election
would occur between March and May in 2019, with 63.64 per cent taking this more optimistic view. Some 24.24 per cent of those polled think the election would be pushed back beyond November 2019.
The June survey of analysts on the investment outlook and investment direction for 2019 was conducted on 25 securities companies, six asset management companies, one investment advisory securities company and two gold futures companies.
“The association has had special issues particularly concerning the election for analysts in this survey and this could reflect their views that it may be the main factor for Thai bourse in the future,” Sombat said.
In the most recent shift by the government, it has said the election would happen in February 2019, or May at the latest.
Based on the survey, 42.42 per cent of those polled expect the Stock Exchange of Thailand (SET) Index to move in a narrow range, with 30.30 per cent looking to a rise and 27.27 per cent forecasting a decline.
The SET Index is forecast to average at 1,749 points, with a high of 1,877 and a low of 1,860, this month.
Some 96.97 per cent of the analysts surveyed viewed the health of the domestic economy and listed companies' earnings as positive factors for the stock market, and 84.85 per cent of them saw domestic political developments - including the election – as positive factors.
Among external factors, 78.79 per cent of the respondents viewed the rising trend for US interest rates as the negative factor, with 72.73 per cent regarding foreign political developments in the same light, as did by 69.70 per cent for capital movements in the Thai stock market. Some 42.42 per cent saw negative signs in the economic conditions of the United States, Europe and Asia by.
As for interest rates at home, 54.55 per cent of those polled expect the Bank of Thailand's Monetary Policy Committee to leave the policy rate unchanged, 36.36 per cent think there will be a rise in the fourth quarter, and 9.09 per cent see an increase coming in the third quarter.
The analysts surveyed forecast the stock market's earnings per share (EPS) at Bt110.64, based on estimated EPS growth of 11.04 per cent and a forward price to earnings ratio (P/E ratio) at 16.36 times.
Smith Banomyong, chief executive officer of SCB Asset Management and chairman of the Association of Investment Management Companies, expects the earnings of listed companies to rise 10-15 per cent this year, in line with estimates on baht appreciation, rising exports and a satisfactory trade balance. Thailand’s economic structure is more immune to potential problems than is the case with neighbouring countries like Indonesia and the Philippines, Smith said.
Paiboon Nalinthrangkurn, chief executive officer of Tisco Securities, said that foreign investors have gained confidence as seen from roadshows in Sweden, Germany and Britain.
“Foreign investors have been paying attention to Thailand's economic continuity. At the same time, they have also been keeping a watch on when the Thai election will occur. If the election takes place, that will help build up foreign investors' confidence,” Paiboon said.
Factors that require monitoring are meetings of policymakers at the US Federal Reserve, the European Central Bank and Bank of Japan, as these could affect capital movement and interest rates across the world.
The positive views of foreign investors accord with the three-month investor confidence index reaching 91.66 in June, which is relatively steady reading.
The index of foreign investor’ confidence has improved by 33.33 per cent to 100, and the local institutional investor confidence index rose by 24.43 per cent to 90.
Based on the investor confidence index's survey, foreign investors view government policies, tourism and easing conflicts as impact factors for capital markets, while local institutional investors view local economy and listed companies' earnings as impact factors.
Foreign investors see foreign outflows and the US monetary policy as factors that could drag down the capital markets, while foreign investors view political developments, inflation and the ECB's policy as negative factors.
Foreign investors see the energy, utilities, banking and construction materials groups as attractive and local institutional investors view energy, utilities, banking and petrochemical groups as attractive.