Title: Thailand’s SET Stock Market Booms as Political Concerns Subside
August marked a significant turning point for the Thai stock market, with the Stock Exchange of Thailand (SET) experiencing a surge in stock prices. The month began with the SET index at 1,320.86 points as uncertainty loomed over the market, resulting in a lackluster mood among investors. The ethics case involving former prime minister Srettha Thavisin cast a shadow over the SET, as the market typically reacts negatively to uncertainty. As the court ruling approached, the index dipped further to 1,297.79 points.
When Mr. Srettha was found guilty and forced to resign, the SET initially tumbled nearly 20 points before making a partial recovery. However, the appointment of Paetongtarn Shinawatra from the Pheu Thai Party as the country’s 31st prime minister breathed new life into the market. The formation of a new cabinet happened quicker than anticipated, bolstering investor confidence.
With major political issues resolved, the SET entered an upward trajectory, closing August at 1,359.07 points, marking a significant increase of 66.38 points or 5.1% from when Mr. Srettha was ousted. The average turnover for August stood at 44.8 billion baht, reflecting a 22% uptick from July.
The positive momentum continued into early September, with the SET adding another 72.06 points. The market tested the 1,430-point mark, showing positive year-to-date growth for the first time in 2024, up by 1%. Daily turnover peaked at an impressive 107 billion baht.
Foreign investors, who had been net sellers since mid-August, switched gears to become net buyers after the new cabinet was established in September. Their renewed interest propelled the SET into a bull market, with substantial inflows observed in the banking and food sectors.
Market sentiment received additional boosts from various factors, including the announcement of the Vayupak Fund. The Finance Ministry revealed that Vayupak Fund 1 aimed to raise up to 150 billion baht, bringing the total net asset value of the Vayupak Funds to 450 billion. The fund’s investment in stocks is expected to generate significant demand in the Thai market.
Another contributing factor was the long-awaited digital wallet stimulus. The government confirmed that initial payments would commence on September 25 for around 14 million individuals, primarily targeting the poor and disabled. However, disbursements for an additional 30 million recipients are scheduled for the following year.
Furthermore, the new cabinet swiftly approved the fiscal budget for 2025, enabling timely disbursement to kick off in October and further stimulate economic activity. The budget allocation includes provisions for the second phase of digital wallet payments to benefit another 30 million people.
The convergence of these favorable factors sets a promising tone for market sentiment as the year progresses towards its conclusion. The year-end target for the SET remains at 1,500 points.
**September Stock Picks**
With increased fund inflows, investment themes are leaning towards large-cap stocks likely to attract attention from both foreign and local institutions. The following are top picks for September:
Airports of Thailand (AOT)
AOT stands to benefit significantly from the recovery in Thailand’s tourism sector. With the tourism high season approaching, foreign arrivals are expected to surpass 3 million per month, targeting a full-year total of 36 million. Ongoing projects, such as expanding ground service operators and aircraft services, offer a buffer against lower duty-free income. AOT’s profit is projected to normalize this year before a 16% increase next year.
Advanced Info Service (ADVANC)
ADVANC remains a top pick in the information and communication technology (ICT) sector. Despite the limited growth potential in Thailand’s mobile operator landscape, ADVANC is well-positioned for expansion into new areas like data centers. Revenue is set to rise with increased tourist arrivals using the company’s prepaid services. Profit is forecasted to grow by 10% this year and 21% next year.
Berli Jucker (BJC)
In the commerce sector, BJC reported a solid net profit in the second quarter following tax adjustments. The company’s shift towards focusing on food and fresh products has proven successful, leading to improved same-store sales growth and margins. BJC stands to benefit from the digital wallet stimulus and offers potential for growth compared to other retailers in the market.
Ch. Karnchang (CK)
As a key contractor, CK emerges as a top pick with the Senate’s approval of the 2025 budget. The government’s infrastructure spending focus aligns with CK’s backlog exceeding 130 billion baht, expected to surpass 200 billion soon. Subsidiaries like BEM, CKP, and TTW show strong prospects, particularly BEM projected to achieve record profits in 2024 and 2025. CK’s involvement in upcoming projects like the Orange Line contract and expressway expansion positions the company for sustained growth.
In conclusion, the SET’s robust performance amidst waning political concerns signals a positive outlook for the Thai market. With strategic investments in key sectors and supportive government initiatives, investors are poised to capitalize on the evolving economic landscape.