Kiatnakin Phatra Securities (KKPS) wrote in its research paper that Thailand’s equity market in 2025 is predicted to witness a balancing act between external headwinds and domestic tailwinds, resulting in a rough draw. The looming threat of a trade war presents a significant challenge, particularly for Thailand with its high export reliance.
Potential global tariffs could adversely impact the country, with the specter of increased exportation of low-cost Chinese goods following tariffs on China. While foreign direct investment (FDI) could see long-term gains, the immediate impact may be limited due to the current low base. The precedent set by the 2018-19 trade war paints a concerning picture, with Thai GDP growth suffering notably compared to other Asian markets, and the SET index enduring a 10% decline.
Political uncertainty remains a possible overhang on Thailand’s outlook. Despite some petition rejections against the ruling party, pending petitions against coalition partners and the prime minister could sustain the cloud of uncertainty. The Thai legal environment might be perceived as challenging by some investors, creating additional caution.
On a positive note, policy support acts as a shield against downside risks. Expectations for three further rate cuts from the Bank of Thailand alongside ongoing moderate fiscal stimulus offer a protective layer. There is room for expanding the Vayupak market support fund, especially if the SET experiences weaknesses. However, any such measures are likely to be reactionary to negative macro or market shifts, suggesting that conditions may need to deteriorate before showing signs of improvement.
The upward potential lies in more aggressive gestures from the Bank of Thailand, positive resolutions of government cases, and surprising global economic growth. Conversely, concerns around China’s economic performance, adverse court judgments, and disappointed rate actions pose as main downside risks.
In terms of sector preferences, the focus is on sectors and stocks with strong bottom-up catalysts. Beneficiaries of fiscal stimulus, resilient to slower Chinese growth, and driven by internal factors are favored. Overweight positions are in the Commerce, Telecommunications, Agriculture & Food, and Consumer Finance sectors. Top recommendations for the first quarter of 2025 include CPF, GLOBAL, IVL, MINT, PR9, SCB, SPRC, and TRUE.
