The Investment Analysts Association (IAA) has revised down its estimate for the Stock Exchange of Thailand (SET) index this year to 1,630 points from 1,707, indicating domestic politics, interest rates and geopolitics are still factors to monitor in the third quarter.
IAA secretary-general Sombat Narawutthichai said domestic politics, interest rate movements by the US Federal Reserve, the global economy, and geopolitics are factors likely to drive the stock market in the third quarter.
A survey of analysts and fund managers from more than 25 companies revealed that the SET index's movement is expected to be sideways for the remainder of this year, changing little from the second quarter within a range of 1,601-1,650 points.
The SET index target for 2023 is estimated at 1,630, down 77 points from the previous forecast of 1,707, said Mr Sombat.
The expected average earnings per share (EPS) for 2023 is 93.21 baht, down from 95.77 baht in the previous survey, with EPS growth expected to reach 7.61% this year, he said.
For the remainder of 2023, one positive factor driving the SET index is the domestic economy. GDP growth this year is projected at 3.38%, down from 3.50% recorded in the previous survey in April, while the oil price is expected to average US$80.53 per barrel.
The Bank of Thailand's Monetary Policy Committee is expected to raise interest rates at some point during its upcoming meetings this year by another 0.50%.
The IAA suggests the new government stimulate investments to drive the economy and postpone the collection of financial transaction tax.
"Analysts view the new government as having a positive effect on the economy as they are set to launch measures to stimulate the economy both in the short and long term," Mr Sombat said, while calling for measures to stimulate investment and help the business sector by attracting foreign investment and increasing exports.
Its next step should be to accelerate investment in infrastructure that supports the potential for economic growth, reduce personal income tax and the cost of living instead of raising the minimum wage and giving money to people, he added.
Analysts advised investors to diversify their portfolios during the second half of 2023 into cash and short-term deposits (14.2%), fixed-income funds (22.8%), Thai stocks or Thai stock funds (24.9%), foreign stocks or foreign stock funds (23.8%), real estate investment trusts (6.59%), gold or gold funds (7.43%), and "others" such as cryptocurrencies (0.21%).
As for foreign stocks and foreign mutual funds, the IAA recommends technology funds as well as China and other Asian stocks.
In terms of Thai stocks, investors should increase the weight of investment in the retail, banking, medical and tourism sectors while reducing the weight of investment in the finance (non-bank), petrochemical, energy and utilities sectors.
Five stocks analysts recommended are Advanced Info Service (ADVANC), Airports of Thailand (AOT), Bangkok Bank (BBL), CP ALL, and Siam Commercial Bank (SCB). Meanwhile, Delta Electronics Thailand (DELTA) should be avoided as it is far above the fundamental value, together with stocks that might be negatively affected by the new government's policies.
