The Thai stock market fluctuated throughout February as foreign investors withdrew from risk assets under pressure from the US inflation situation.
The recent US economic data of non-farm payrolls and PMI rose higher than the market expected in January, particularly PCE, which rose to 5.4% compared to last year while core PCE rose 4.7% YoY, higher than the market forecasted at 4.4%.
The FedWatch Tool data indicated that the probability of markets expecting a 50 basis point rate hike in this upcoming meeting in March shot up to 41.7% from merely 2.8% in early February. This would take the Fed’s fund rate to a range of 5% – 5.25%.
These figures indicated that the FED may continue to raise interest rates, which strengthened the value of the US dollar against global currencies, including Thai baht.
However, some securities are benefiting from the baht depreciation. According to Mr. Wichit Arayapisit, senior director and investment strategist at Maybank Securities (Thailand), the Thai baht has depreciated in response to the strengthening of the US dollar, which had risen in anticipation of Fed interest rate hikes.
On the other hand, Thai stocks in the frozen food, electronics, and logistics sectors that focus on exports may benefit from the situation.
Mr Wichit recommends Thai Union Group Public Company Limited (SET: TU), for frozen food because not only does the company benefit from trading in US dollars, but its profit margin has also increased significantly as well.
As for the electronics industry, the strategist recommends HANA Microelectronics Public Company Limited (SET: HANA), which has the industry’s lowest PE rate while also benefiting from the problematic chip shortages beginning to ease.
Meanwhile, the logistics industry may benefit from electronic shipping as well as the possibility of more trading routes to Mainland China and Hong Kong. WICE Logistics Public Company Limited (SET: WICE), is a front runner in this sector.