Thai Stock Market Poised for Gradual Recovery Amid Easing Rate Hike Pressures
InnovestX Securities anticipates the Thai stock market will maintain its upward trajectory as pressure for U.S. interest rate hikes eases. According to Mr. Pobchai Phatrawit, Equity and Digital Asset Strategist at InnovestX, the SET Index is benefiting from positive external factors, particularly the U.S. September nonfarm payrolls report, which showed a smaller-than-expected job gain of just 29,000. This has significantly reduced market expectations for a Fed rate hike in October, with the probability now hovering around 20%. The easing of monetary tightening concerns has bolstered risk assets, though the Fed’s December meeting remains a key focus.
Additional support for the market comes from the easing trend in oil prices, despite temporary rebounds due to Middle East tensions. The G7’s plans to release emergency oil reserves have helped alleviate supply concerns. InnovestX has set a support level for the SET Index at 1,570 points, with resistance between 1,585 and 1,590 points. While recovery is expected to be gradual, volatility may persist due to domestic factors, including the ongoing flood situation, which is assessed as less severe than initially feared.
Foreign investors have been net sellers of Thai equities for nine consecutive sessions, totaling approximately THB 35 billion, largely due to risk-reduction strategies amid the flooding. However, if the flood situation proves less severe, selling pressure may moderate, potentially leading to a return of foreign capital. Rate-sensitive sectors, including power plants, telecommunications, and financials, stand to benefit from the more relaxed interest rate environment. InnovestX recommends focusing on domestic recovery stocks, particularly in retail and construction materials, such as HMPRO, GLOBAL, CPALL, BJC, CRC, and DCC.
The tourism sector is also highlighted, supported by the peak travel season, China’s Golden Week, and upcoming domestic events. Stocks like ERW, CENTEL, and AOT are expected to benefit. Defensive stocks, including healthcare equities like BCH and PR9, as well as telecommunications firms like TRUE, are noted for their stability. Among commercial banks, BBL and KBANK are viewed as attractive due to their dividend yields and trading below book value, while KTB is considered overvalued.
Political factors are currently deemed a limited influence on the market, with investor focus primarily on the flood situation. However, once flooding subsides, political developments could regain significance in shaping investment sentiment.