CLSA Securities (Thailand) has outlined four pivotal factors expected to steer the market in the fourth quarter of 2024 – a projected rate cut, the new Vayupak Fund, the upsurge in high-season tourism, and the launch of the digital wallet initiative. The Vayupak Fund is anticipated to exert the most significant influence among these drivers.
Despite prevailing challenges, sectors such as tourism, healthcare, consumer staples, and global refinery show promise. The SET index target for the end of 2025 has been set at 1,500 pts.
Even though Thailand faces structural issues, positive momentum is expected in 4Q24 driven by the rate cut, Vayupak Fund, high-season tourism, and the digital wallet scheme. However, doubts linger regarding the efficacy of certain new ventures, such as the government’s mass transit buyback in Bangkok, tax alterations, and initiatives to boost new investments in data centers.
The launch of the new Vayupak Fund is poised to have a substantial impact on the market, with estimates suggesting a potential 7% boost to the SET index. The market yielded an 11% return in the first three months after Vayupak Fund 1 was set up in 2003.
While challenges persist, there are bright spots in sectors like tourism, healthcare, consumer staples, and global refinery. Meanwhile, CLSA sees banks and consumer finance as weak spots given deteriorating asset quality and rising NPLs. Additionally, the expected rate cut could bolster economic sentiment and lead to improvements in loan growth and asset quality.
Thailand’s market valuation has descended to a cyclically adjusted price-to-earnings ratio of 13x from the long-term average, positioning it as one of the most devalued markets in Asia. Forecasts indicate an earnings growth of 14% for 2025, prompting a revision of the SET index target to 1,500 by the end of 2025 based on a PE ratio of 14.6x.
Top stock selections believed to benefit from the market drivers include CPN, CPALL, AMATA, BDMS, and TOP.
