CLSA’s latest analysis on the Thai stock market suggests that despite ongoing political uncertainties, the market has already priced in a significant portion of the downside risks. This presents an attractive valuation for a potential near-term recovery. The firm has raised its SET Index target for end-2025 to 1,275 points, nearly 10% upside from the current level. This signals optimism for the Thai stock market’s trajectory.
Political Landscape and Market Sentiment
A key factor influencing the Thai market is the ongoing court case against Prime Minister Paetongtarn, which is expected to remain an overhang until September. CLSA expects the court’s final ruling to be in September, following extensions for defense statements and counterarguments.
Recent political sentiment indicators show significant shifts. A Nida Poll conducted in June revealed a substantial drop in Pheu Thai’s popularity, from 28.1% to 11.5% in Q1 2025. Prime Minister Paetongtarn’s personal popularity also declined sharply, from 30.9% to 9.2%. In contrast, the opposition People’s Party saw its support rise from 37.1% to 46.1%.
CLSA notes that the market is likely to favor a house dissolution, as it could potentially lead to a government change. Historically, the SET Index has shown positive returns, typically rising 2.2–3.5% in the three months leading up to general elections. Given Pheu Thai’s declining popularity, house dissolution is considered a last resort, making the earliest likely timing for a snap election sometime in 2026.
Market Performance and Valuation
Many downside risks — including political uncertainty, the 36% U.S. tariffs, slowing exports, a decline in Chinese tourist arrivals, fewer Middle Eastern patients, and weak second-half 2025 earnings visibility — are believed to be already priced into the market. The SET Index has declined 18% year-to-date and 31% since the end of 2022, marking its third consecutive year of losses.
However, CLSA anticipates a near-term rebound, supported by attractive valuations. The SET is currently trading at a 2025CL PE of 14.2x. The market is viewed as oversold and under-owned, suggesting room for PE multiple expansion. One positive signal is the stabilization of Chinese tourist arrivals, with the year-on-year decline improving to -40% over the past three weeks, from -48% in March. This trend supports positive sentiment across domestic consumption, airport services, retail, and banking sectors.
CLSA has slightly lowered its 2025CL market earnings per share (EPS) estimate to 80.6 (from 83.5) to reflect recent earnings cuts. However, it forecasts moderate EPS growth of 6.2% in 2026CL to 85.6.
Key Recommendations and Top Picks
Based on its analysis, CLSA has raised its 2025CL SET Index target from 1,120 to 1,275 points, pegged to a 15.8x PE (average of 2017–2019 and 2022–2025, excluding the COVID period). It also introduces a 2026CL SET Index target of 1,355 points.
CLSA’s investment strategy focuses on a bottom-up approach, favoring stocks with attractive valuations. Its top picks include:
- Bangkok Dusit Medical Services (BDMS)
- CPALL
- Central Pattana (CPN)
- Muangthai Capital (MTC)
- Osotspa (OSP)
Additionally, CLSA highlights “bombed down” and high-beta stocks as attractive opportunities, such as:
- Central Plaza Hotel (CENTEL)
- CP Axtra (CPAXT)
- Central Retail (CRC)
- Indorama Ventures (IVL)
- WHA Corp (WHA)
