Tisco advises Thai share-buying spree
Tisco Securities says investors should snatch up Thai shares as the global stock market will make a 5-8% correction for overinflated stock prices in the coming months.
Deputy managing director Viwat Techapoonphol said he expects the global stock market to drop within the next two months.
Analysts say developing markets’ stock prices are inflated and may reverse soon. The contraction will take place before the Federal Reserve’s meeting on Sept 22.
Also foreboding are economic indicators which have moved contrary to the stock market. Investors are seeking to reduce risk, as liquidity reductions, the dollar’s appreciation and the Fed’s interest rate hikes and balance sheet reductions become increasingly salient.
Mr Viwat said Tisco expects a support line close to 1,550-1,530 and a resistance line near 1,600 towards the end of the year. The firm recommends stocking up on Chinese A shares.
China A shares (Yuan traded stocks registered in both Shanghai and Shenzhen) have low valuations and large upsides. Moving forward, the firm will channel funds to Chinese stocks, which it expects to perform robustly for the next 3-5 years.
The SET Index is expected to somewhat decline along with the global equity market. But the index will gradually rise in the next two months due to its relatively undervalued position in comparison to the world market.
The SET grew by 2.6% in the first half of 2017 — the lowest rate in Asia.
Asian markets have made a strong showing this year. Japan, Hong Kong, South Korea, Taiwan and India had returns close to 14%; the American index climbed 9%; and European Markets an average of 8%-9%.
The SET is in a good position to post a strong performance during the last two quarters, thanks to Thailand’s economic recovery and higher fund flows.
Mr Viwat said Tisco recommends stocks in government-related industries like construction, logistics, industrial estates, as well as those in sectors that benefit from the baht’s depreciation like exports and consumer goods.