SCBS op­ti­mistic about SET gain


SCB Se­cu­ri­ties (SCBS) re­mains up­beat that the Thai bourse will reach 1,900 points by year-end, driven by pub­lic and pri­vate in­vest­ments, bank loan growth and im­proved pri­vate spend­ing stim­u­lated by the mid-year bud­get.

De­spite prospects of a rise in oil prices and height­en­ing geopo­lit­i­cal tensions in the Mid­dle East, Thai­land’s econ­omy is ex­pected to be bol­stered by a pri­vate in­vest­ment re­cov­ery and con­tin­ued ro­bust con­sump­tion com­pared with last year, said SCBS se­nior vice-pres­i­dent Isara Ordeedolch­est.

Based on the lat­est eco­nomic fore­cast by the In­ter­na­tional Mone­tary Fund, the global econ­omy is pro­jected to grow 3.9% this year, driven by an up­ward re­vi­sion of the US eco­nomic fore­cast, Mr Isara said, adding that Thai­land’s ex­ports will con­tinue to grow in these cir­cum­stances.

Al­though there could be an im­pact on in­vest­ment sen­ti­ment re­gard­ing the Thai bourse, the con­flict in Syria is viewed as a proxy war be­tween Rus­sia and the US and it is be­lieved that the two coun­tries will find a so­lu­tion through ne­go­ti­a­tions, he said.

The Stock Ex­change of Thai­land (SET) in­dex is ex­pected to move nar­rowly in the sec­ond quar­ter in a range of 1,750-1,800 points, Mr Isara said.

Earn­ings per share among SET-listed com­pa­nies should hit 110 baht in 2018, up from 100 baht last year, and reach 120 baht in 2019, he said.

Top picks for stocks in the sec­ond quar­ter are those in the bank­ing sec­tor, as SCBS ex­pects loans to re­sume growth and as­set qual­ity to im­prove in the first half.

Re­tail stocks are also set to go up, a pre­dic­tion at­trib­uted to the gov­ern­ment’s plan to in­vest part of its mid-year bud­get to stim­u­late con­sumer spend­ing, Mr Isara said.

Health­care stocks are also of in­ter­est be­cause they have lagged be­hind their coun­ter­parts de­spite prof­its that are ex­pected to grow ro­bustly in 2018, he said.

The in­creased pop­u­lar­ity of health in­sur­ance is likely to help stir health­care spend­ing in Thai­land in the long term.

At present, there are two main risk fac­tors pos­ing a threat to the global econ­omy and fi­nan­cial mar­kets, Mr Isara said.

The first is mount­ing con­cerns over higher in­ter­est rates and fi­nan­cial costs.

US in­ter­est rates are likely to rise sooner than ex­pected, since the in­fla­tion rate is poised to ac­cel­er­ate in the wake of an in­ten­si­fied labour mar­ket, Mr Isara said.

The out­put gap has also widened, in­di­cat­ing that pro­duc­tion ca­pac­ity util­i­sa­tion is ac­cel­er­at­ing in many busi­ness sec­tors and growth mo­men­tum may be stronger than ex­pected.

Un­der this sce­nario, the fore­cast calls for the US Fed­eral Re­serve to raise its pol­icy in­ter­est rate four times this year, up from three times pro­jected ear­lier, ac­cord­ing to SCBS.

The sec­ond risk fac­tor comes from wor­ries over a global trade war re-emerg­ing.

Since US Pres­i­dent Don­ald Trump was elected in Novem­ber 2016, the US has im­posed im­port tar­iffs on so­lar en­ergy, wash­ing ma­chines, steel and alu­minium, Mr Isara said.

Al­though the US has re­laxed the tar­iffs for some trade part­ners, in­clud­ing Aus­tralia, Canada and Mex­ico, the lat­est an­nounce­ment of its plan to raise im­port tar­iffs, which has led to re­tal­i­a­tion by China, has in­ten­si­fied tensions and fu­elled con­cerns about the emer­gence of a trade war.

Separately, the Com­merce Min­istry’s Trade Pol­icy and Strat­egy Of­fice (TPSO) an­tic­i­pates that US mil­i­tary ac­tion against Syria will in­cur a short-term psy­cho­log­i­cal ef­fect on the com­mod­ity mar­ket be­cause a full-scale mil­i­tary oper­a­tion by the US, Rus­sia and Iran is un­likely to oc­cur.

If there are no fur­ther out­breaks of vi­o­lence, prices of oil and gold bul­lion are ex­pected to re­turn to their usual range in the com­ing pe­riod, ac­cord­ing to the TPSO.

SCBS se­nior vice-pres­i­dent Isara Ordeedolch­est pre­dicts healthy in­vest­ment sen­ti­ment from both the pri­vate and pub­lic sec­tors this year.

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