Foreign funds continue to flow into Thai large-cap stocks, pushing the SET Index past 1,700 points, the highest level in two years since the Covid outbreak started at the beginning of 2020.
The Thai bourse recorded a total of 43.7 billion baht in capital inflows as of Feb 9, the highest in the region year-to-date.
According to Asia Plus Securities' (ASPS) research, foreign funds will continue to enter the Thai stock market throughout this year.
Analysts at ASPS said foreign investors will increase their holdings of Thai stocks because the current foreign holding of 21% is still low compared with 29% in the past.
According to the research, the MSCI Index may also increase its weight in Thai stocks in 2022. The downside in selling is also quite limited.
In addition, there are many value stocks in the Thai market in demand now, according to ASPS.
Roughly two-thirds of the Thai stock market are commodities and stocks that are recovering following the domestic economic rebound.
These stocks have huge growth potential in the long term because Thai listed companies' operating results and profits have outperformed those in developed countries, said the research.
The Thai economy has potential to grow 5% this year from the pre-Covid period, while listed companies' profits are expected to grow by 11%, higher than the 6% estimated for developed stock markets, according to ASPS.
Moreover, excess liquidity should continue to support Thai stocks in 2022 as the Bank of Thailand's Monetary Policy Committee is expected to keep the policy interest rate low the whole year, while other global central banks have signalled more hawkish policies, preparing to raise interest rates to curb inflation.
According to data from the Stock Exchange of Thailand (SET), foreign investors have been net buyers of Thai stocks for nine consecutive days, raising the SET Index by more than 50 points from 1,634 to 1,703 points on Feb 9.
ASPS recommends investors buy large-cap stocks with good fundamentals whose prices are still laggards, such as Bumrungrad Hospital (BH), Siam Makro (MAKRO) and Thai Oil (TOP).
Krungsri Securities said foreign investors are interested in investing in large-cap stocks, especially bank shares being helped by rising interest rates and an uptick in US Treasury yields, which have hit a two-year high.
For investment strategy, Krungsri recommends buying bank and assurance stocks such as Bangkok Bank (BBL), Kasikornbank, Krungthai Bank, Siam Commercial Bank and Bangkok Life Assurance.
In addition to banks, tourism-related shares, such as Airports of Thailand, Minor International (MINT) and Central Plaza Hotel, are interesting because they should benefit from the government's easing of Covid restrictions, said the brokerage.
