JPMorgan selected Thai stocks as its top pick in Southeast Asia, citing a stronger-than-expected comeback in tourism as a result of China’s reopening and the anticipated benefit to domestic consumption.
JPMorgan analysts see Chinese travelers as a key catalyst for Thailand’s tourism revenue, helping to double the industry income to US$39 billion this year from a year ago.
The bank predicts a surge in foreign travelers this year to 26 million, which is equivalent to around 65% of the total visitors in 2019, the year before the pandemic.
According to Kae Pornpunnarath, JPMorgan’s head of Thai equity research, the bank is very positive about China’s reopening, which will push Thailand to stand out among its ASEAN peers.
JPMorgan said that Thai equities could outperform the regional market excluding Vietnam due to a combination of factors, including a historical run-up in the market before general elections and sustained margin expansion for corporates from lowering energy and raw material costs.
The SET Index is forecast to gain by 7% this year to a near record 1,800, with the bank staying overweight on stocks in the consumer staples, consumer discretionary, and healthcare sectors.
Stocks like CPALL and HMPRO are recommended by JPMorgan in anticipation of strong domestic demand. The bank also favors utility stocks like GPSC, which are viewed as “defensive” plays against a global economic slowdown.
Although the return of Chinese tourists is considered a windfall for the aviation industry, AOT’s valuation has already reflected market expectations, and upside is seen as “limited,” added Kae.
