CLSA Securities (Thailand) stated that the recent surge in foreign net buying, reaching levels unseen since the end of December 2022, has reinvigorated the market sentiment in Thailand.
The SET index exhibited a robust 2.8% increase on 5 September, emerging as the leading performer in Asia. Key drivers behind this upswing include the anticipated timeline for the new Prime Minister’s policy statement to the House, the rollout of cash handouts, the initiation of Vayupak Fund unit sales, and lower-than-expected August inflation, signaling a potential rate cut by year-end.
Notably, small banks, consumer finance, and property sectors are poised to reap the benefits of a rate reduction, emphasizing the importance of translating policies into tangible outcomes for sustained market growth.
Providing a clearer outlook on the upcoming events, the new cabinet inauguration is slated for 6 September, with PM Paetongtarn scheduled to deliver the policy statement earlier than planned on 12-13 September. The initial cabinet meeting on 17 September is expected to promptly approve cash aid distributions to vulnerable and disabled groups, benefitting approximately 14.5 million individuals.
In line with this, the anticipated sale of the Vayupak Fund is set to occur between 16-20 September for retail investors and 18-20 September for institutional investors. The Fund, valued between Bt100-150 billion, is projected to yield returns ranging from 3-7%, providing an attractive investment option with principal protection.
Following the successful government bond sale at competitive yields, the Vayupak Fund is poised to commence investments on 1 October and is scheduled to be listed on the SET by 15 October, enhancing market liquidity and investment opportunities.
With the market rallying in anticipation of the Vayupak Fund launch, investment focus is likely to center on sectors such as small banks, consumer finance, and property, projected to benefit from a potential rate cut.
CLSA recommends an overweight stance on consumer staple retailers like CPALL and CPAXT, anticipating a growth surge in third-quarter same-store sales growth. Additionally, the current strength of the baht against the US dollar and the prospect of a rate cut by year-end further bolster market optimism, underlining the necessity of materializing policies into tangible outcomes for sustainable market growth.
