Asia Plus Securities notes that Thailand’s stock market delivered a standout performance in the third quarter, climbing 19% between July and September to secure the fifth spot among global equity markets.
The strong momentum carried into September as Thai shares rose a further 5%, ranking eighth worldwide for the month, with renewed investor confidence following clarity on the country’s new government.
However, the analyst cautions that these rapid gains have pushed the market into overbought territory, flagging a heightened risk of a near-term correction.
From a technical perspective, 17% of stocks listed on the Stock Exchange of Thailand (SET) now exhibit a Relative Strength Index (RSI) above 70, a threshold commonly interpreted as overbought. Historical trends suggest that when more than 15% of SET-listed stocks breach this level, the index typically registers a short-lived pullback.
The outlook is further clouded by emerging signs of foreign fund outflows, as overseas investors sold a net THB 6.6 billion in Thai stocks over the past three trading sessions.
In addition, Asia Plus highlights that further upside appears increasingly limited, with Bloomberg consensus forecasts placing the SET Index at 1,380 points over the next 12 months, implying a gain of only 6%. Markets typically undergo a short-term consolidation when upside projections fall below 10%, especially after pricing in a wave of positive news.
Facing these challenges, the broker recommends investors adopt a more selective approach, focusing on stocks with firm catalysts.
Top picks include tourism-related names such as ERW, CENTEL, and AAV, which are expected to benefit from China’s upcoming Golden Week holidays, as well as defensive stocks like BDMS and BCH. Furthermore, high-dividend yield plays such as SCB, offering an 8% annual yield, and PTT, yielding 6.4%, are also favored.
