The Thai stock market will see at least 100 billion baht of foreign inflows next year if the government succeeds in preventing the emergence of a new outbreak, according to the Federation of Thai Capital Market Organizations (Fetco).

The Thai bourse is expected to be less affected by the Federal Reserve’s tapering of its asset purchases and interest rate hikes thanks to Thailand’s strong economy and high foreign reserves.

Paiboon Nalinthrangkurn, chairman of Fetco, said the Thai economy is quite strong compared with other emerging markets.

The country has ample foreign reserves and less foreign debt, for both state agencies and the private sector. The Thai economy will have higher immunity against US dollar appreciation when the Fed raises its interest rate and tapers its quantitative easing programmes, said Mr Paiboon.

When the interest rate is increased, the baht will depreciate less than other currencies in the region because Thailand has much less foreign debt in US dollars compared with other emerging economies, he said.

If Thailand manages to curb the outbreak next year, sectors that were battered by the pandemic such as tourism, banking and telecommunications will rebound, said Mr Paiboon.

In the best-case scenario, Thailand will attract 10 million tourists next year and the SET Index will hit 1,800 points, he said.

However, as the market remains volatile, he recommended reducing risks by investing in healthcare and defensive stocks such as electric power companies.

Mr Paiboon said analysts forecast Thai listed firms’ net profits will continue to grow by 10-15% next year as all risk factors ease.

Even though the Public Health Ministry announced the first local case of Omicron from a foreign traveller, market sentiment remains positive as scientists found existing vaccines can be used as a booster or modified as protection against the new variant in the short term, he said. As there is no need for a completely new vaccine and patients of the variant mostly had mild symptoms, the stock market’s concerns over Omicron’s impact on a recovery have been allayed, said Mr Paiboon.

He said the Investor Confidence Index for the Thai bourse in November stood at 135.16, down 19.9% from the previous month, retreating to the bullish zone. An expected local economic recovery is the largest support factor, followed by vaccination distribution and revival of the tourism industry.

Meanwhile, the emergence of the new variant, international conflicts and fund outflows are top three worrying factors denting confidence. The most attractive sector for the next three months is telecom, while the least attractive is fashion.

Ariya Tiranaprakij, deputy managing director of the Thai Bond Market Association, expects the Bank of Thailand’s Monetary Policy Committee to keep its policy rate unchanged at 0.5% at its meeting in December. Yields of five-year and 10-year government bonds at the end of the fourth quarter are unlikely to change from the Nov 19 survey.

Source: The Bangkok Post