Tisco predicts SET to break 2,000
Best-case scenario sees enlivened bourse
The Stock Exchange of Thailand (SET) index is projected to reach 2,000 points in 2019 if tensions over geopolitics and trade wars ease, and the country’s election proceeds without conflict, says financial services firm Tisco Securities.
The SET is expected to rise to 1,750 points by the end of this year.
Paiboon Nalinthrangkurn, chief executive of Tisco Securities, said equities should tally good returns next year, possibly exceptional ones.
Normally the year following bad stock market returns swings back with positive returns, said Mr Paiboon.
“This year, stocks worldwide had negative returns, so next year they should rebound as negative factors will ease,” he said.
The potential rebound will be a result of global and local factors. The most pressing issue globally is the effect of the US-China trade war on the global economy.
The market expects President Trump will relax tensions, especially tax barriers, out of concern that US citizens will not support the policy if a global economic slowdown is possible.
If Mr Trump maintains his tariff policy, the trade war’s effect on the global economy will only increase. This impact, combined with rising interest rates and local political dysfunction, if Thailand cannot set up a new government or there are election delays, will dampen the market, narrowing the SET’s peak to 1,850 points next year, said Mr Paiboon.
He said Tisco also expects Thailand’s interest rate to be raised twice in 2019. The first time will be early in the year, followed by the end of the year rising to 2%.
The interest rate increase will likely harm bond investments.
“I support the Bank of Thailand raising the interest rate to 2% next year,” said Mr Paiboon.
“Inflation is still low, but in the future the central bank will be able to stimulate economic growth by cutting interest rates.”
He said even with a 0.5% increase in
interest rates, that is still low enough to support economic growth and investment in the stock market.
The US will slowly reduce its balance sheet, while European countries will start raising interest rates next year, said Mr Paiboon.
Japan must inject more money into its economy, so liquidity will remain in the global economic system, he said.
Mr Paiboon said if listed firms’
performance is in line or better than market expectations, stock market confidence will be supported next year.
The sectors he recommends for investment in the next 12 months are consumption, finance and healthcare, as these sectors will benefit from government policies that spur consumption and investment.
Komsorn Prakobpol, head of the strategy unit at Tisco, said Thai exports and tourism will weaken next year on
predictions of a global economic slowdown affecting Thailand’s GDP growth.
Investments in mutual funds next year are recommended for funds that emphasise healthcare, US financial stocks, Japanese stocks, Tisco Strategic funds (comprising 65% fundamental stock and 35% fixed income), and Tisco Income Plus (investment in stock, fixed income, REIT and other assets in both local and global markets).
Equities should tally good returns next year, possibly exceptional ones. PAIBOON NALINTHRANGKURN Chief executive, Tisco Securities