Asia Plus Securities noted that expectations for a U.S. Federal Reserve interest rate cut have shifted, following comments from Chair Jerome Powell that a rate reduction in the December 2025 meeting may not occur due to inflation remaining above the target.
This outlook has helped push the yield on the U.S. 10-year Treasury higher by 13 basis points over the past two days. Historically, over the past five years, periods of rising 10-year bond yields have typically seen ‘Value’ stocks outperform ‘Growth’ stocks.
In addition, the brokerage firm observed that when foreign investors make substantial purchases of Thai bonds, this often paves the way for increased inflows into the Thai stock market. Currently, foreign investors have recorded net purchases of Thai bonds totaling more than THB 36 billion so far this month, and there are early signs of a return to Thai equities, with net foreign buying reaching THB 486 million on Thursday.
From a valuation standpoint, Asia Plus highlights that the SET Index’s price-to-earnings (P/E) ratio appears attractive. Over the next three to four months, the trailing P/E ratio of the Thai stock market is expected to decline as profits for the third and fourth quarters of 2024 were at a low base. This supports a current trailing P/E of around 17.0 times.
Should earnings for the third and fourth quarters of 2025 normalize to approximately THB 250-260 billion, the trailing P/E could further decline from 17 times at the end of 2Q25 to 14 times by the end of 4Q25. Excluding DELTA, which trades above 100 times P/E, the SET Index’s P/E would be just 12 times.
Following that, Asia Plus has provided its investment strategy, recommending gradual accumulation of five stocks that are likely to benefit as foreign investors perceive Thai equities as increasingly attractive:
- CPF, which has a P/E of 6 times, with pork prices showing signs of recovery after the end of the vegetarian festival;
- WHA, trading at 9 times P/E, positioned to benefit from improved tariff trends;
- OR, expected to see its P/E fall rapidly from a loss-making base in 3Q24 and a possible re-entry into the MSCI Large Cap Index as early as November 6, 2025;
- OSP, with its P/E set to decrease quickly from a loss-making base in 3Q24, now at 13 times and poised to benefit from the government ‘Half-Half’ co-payment stimulus program;
- BANPU, considered a laggard with its price referencing a tender offer for BPP shares.
