FSSIA Recommends Selective Buying amid Limited Short-Term Upside; Favors Domestic Plays

Nearly three weeks have gone since the general elections, but the future of the new Thai government remains uncertain, and it is being questioned if the Move Forward party and the Pheu Thai party can be successful in forging a coalition government.

On top of the political issue, the prospect of slower global economic growth and higher interest rates, which will likely put a lot of pressure on stock markets throughout the year, hence FSS International Investment Advisory (FSSIA) lowered Thailand’s benchmark SET index target for 2023 to 1,620, and recommended a selective theme for investment.

FSSIA stated in a note published on Thursday that the global economy is likely to see significantly slower GDP growth in the second half of 2023, primarily due to persistent inflation and high interest rates in the US, which could limit the upside for risky assets; however, Thailand’s economy should grow despite looming political issues in the short term.

Private consumption and tourism are expected to continue to play the key roles in driving Thailand’s GDP growth in 2H23, while exports are still under a cloudy outlook amid slower global demand, said the brokerage.

Markets remain focused on whether a new coalition can be set up. Increases in the minimum wage, changes to energy policy, financial assistance for SMEs, and some new taxes are among the many of the Move Forward Party’s proposals that have made investors worried about their future returns.

FSSIA suggests going with a “selective” investment theme that places a focus on stocks that are less likely to be negatively affected by changes in government policy and global economic uncertainty. Top picks are domestic and reopening plays including BA, BDMS, CENTEL, CPN, MAKRO, NSL, ORI, and TOA.