January 23, 2017 01:00 By Thanawat Patchimkul Head of Research DBS Vickers Securities (Thailand)
Global events including Trump inauguration affecting markets
Global stock markets are moving sideways as any further upside needs justification.
Most of the positives have been factored by the markets given the prospects of improving funda-|mentals on the back of stimulus measures from the incoming US administration of President Donald Trump. Clearer policies with sound implementation approaches are needed to justify any further rally |in the global equity market. Otherwise, the market will move |into the consolidation phase. Economic fundamentals are improving in most places across the globe. The US leads the pack among developed markets with an improving growth outlook as well as rising inflation. However, numerous risks lie ahead. Given the high market volatility expected this year, we advise investors to rebalance their portfolio more often than usual.
The Stock Exchange of Thailand has pulled back from 18-month highs reached in early January amid recent negative news (severe flooding in the South and fresh election delays) and external uncertainties (notably the change of administration in Washington). Nonetheless we maintain our positive view on the Thai market and expect earnings momentum to pick up. Although the massive flooding in southern Thailand hurts tourism and disrupts rubber and palm-oil production, we expect that home-improvement companies such as HMPRO (Home Product Center) will see increased demand for home-repair materials and electrical appliances after the floods recede. We anticipate an increase in demand for road and other construction-repair materials, which should help stocks such as SCC (Siam Cement), TPIPL (TPI Polene) and TASCO (Tipco Asphalt).
Our top picks for this year: PTT, IVL (Indorama Ventures), BRR (Buriram Sugar), STA (Sri Trang Agro-Industry), CPF (Charoen Pokphand Foods), TU (Thai Union Group), SMT (Stars Microelectronics (Thailand)), SVI, CK (Ch Karnchang) and SEAFCO.