First-quarter net profits of SET-listed companies are likely to hit a record high of 300 billion baht, with an analyst suggesting better-than-expected quarterly earnings reports will help attract investment and support foreign inflows to the Thai stock market in the second semester.
Tisco Securities expects banking and tourism stocks to outperform.
Apichart Phubancherdkul, head of strategic research at Tisco Securities, said the Russian-Ukrainian war has hit stock markets in other regions, particularly Europe, harder than markets in Southeast Asia.
With energy stocks accounting for a large portion of market capitalization, the Thai stock market continues to post bumper profits and attract foreign investors who view the Thai stock market as a safe haven.
Mr Apichart said seven banks according to Tisco’s analysis are expected to record a total profit of 48.9 billion baht, up 11.4% from the same period last year and 21.7% compared to the prior quarter, driven by loan growth and lower loan loss provisions.
In addition, the resumption of local economic activities has also contributed to increasing banks’ income and commission-based profits and fostered better asset quality management.
Tisco thinks big banks are likely to see lower borrowing costs than smaller banks and also benefit from higher interest rates.
However, investors should still watch for risks from the global economic slowdown triggered by war and economic sanctions, rising inflation and the Federal Reserve’s tightening monetary policy which will remove liquidity from the system from May to June. .
For domestic risks, investors should also watch the results of the no-confidence debate against the government in May.
For the April investment strategy, Tisco recommends holding 70% equities as the Thai stock market remains on an uptrend and continues to see foreign inflows.
The brokerage also recommends focusing on stocks in three investment themes.
The first group includes stocks intended to hedge against inflation and stocks expected to benefit from rising interest rates. The group’s top pick is Bangkok Bank (BBL) with a target price of 151 baht.
The second group includes stocks that should benefit from the reopening and the easing of travel restrictions such as Minor International (MINT).
The latter includes stocks with local business cycle supporting factors such as AP Thailand (AP) and Bangkok Chain Hospital (BCH).