INVESTORS should make “long-term quality investments” in property, infrastructure, power and healthcare next year despite the expected volatile and uncertain environment, says an expert from KTB Securities (Thailand) (KTBST).
KTBST’s top picks in the Stock Exchange of Thailand (SET) for next year are Asia Aviation (AVV), Amata Corporation (AMATA), Bangkok Bank (BBL) and BGrimm Power (BGRIM).
KTBST, a brokerage firm, offers services in investment banking, private wealth management, mutual funds, derivatives trading and securities brokerage. It aims to launch an initial public offering (IPO) in 2019 for listing in the SET.
“Growth of the economy and the stock market have passed the peak, and we expect slower economic expansion next year, which will be reflected in a more volatile stock market,” Chatree Rojana-Arpa, executive vice president for strategy and product development at KTBST, said.
Chatree was speaking at a press conference in Taipei, addressing the 2019 stock market trends and economic outlook.
Economic growth has slowed down in the second half of 2018 mainly due to the ongoing US-China trade war, the signalling of the US Federal Reserve to increase interest rates and pressures on prices of commodities such as oil, Chatree said.
The trade war, in particular, has damaged the confidence of investors globally, leading to capital flows from the stock markets as reflected in the SET index dipping below 1,650 last month.
Chatree predicted the SET index to recover to between 1,700 and 1,750 points in the first quarter of 2019, saying the general election, scheduled for February, would boost consumption, investment and government expenditure, which in turn would stimulate economic growth and boost investors’ confidence.
Thailand’s GDP is predicted to grow by 3.9 per cent in 2019 with consumption expanding by 4.5 per cent, government expenditure 2.4 per cent and investment by 6.1 per cent if the next government continues with the populist economic policies, he said.
“Given our forecast of the SET trend next year, we advise investors to take fewer risks as there are lower return expectations. They should set up portfolios that have downside protection and expect a return on investment of approximately 10 per cent,” he suggested.
Two of the key sectors forecast to be overweight in 2019 are banking and construction, according to Chatree.
The banking sector is expected to be overweight because of the prospects of the Bank of Thailand increasing interest rates towards the end of 2018 and twice in 2019. The suggested SET stocks are Bangkok Bank (BBL) and Kasikornbank (KBANK), he said.
Meanwhile, the construction sector will likely be overweight in 2019 as a result of the government’s plan for infrastructure development and construction in the Eastern Economic Corridor. AMATA stock is expected to outperform in 2019, he said.