By Nikki De Guzman:
The Stock Exchange of Thailand (SET) continues to cling on to its previous high of 1,600 points in 2013 but it may struggle to surpass this level again due to worsening tensions between the Finance Minister and Bank of Thailand (BOT) governor on measures to curb the baht’s rise.
Last Thursday, SET reversed early gains because of rumors that the government plans to replace the BOT governor. Although this was later denied, the working relationship between both agencies was already shaken, warned the BOT chairman.
Moreover, Thailand’s headline inflation rate in April dipped to 2.42 percent compared to 2.69 percent in the previous month. This is also significantly softer than the 2.7 percent consensus estimate.
Despite lower inflationary pressures, BOT is expected to maintain a neutral stance rather than adopt easing measures as the central bank is more focused on financial stability risks rather than risks to inflation and growth, said Trinity Securities Research Analyst Nuttachart Mekmasin. The firm is the economic strategy arm of Tisco Securities.
“We anticipate further trading volatility in May and continue to advise using market dips as buying opportunities.”
“In the banking space, SCB and BBL remain our top picks while TCAP is now our favourite among lower-tier banks. Note that we have revised up our 2013 to 2015 core earnings for TCAP by four percent on average and raised our target price by 24 percent to THB51 to reflect the projected improvement in its balance sheet and additional loan-loss-reserve buffers after it books a THB9.7-billion after-tax gain from the planned sale of Thanachart Life in Q2 2013,” added Nuttachart.
Nikki De Guzman, Junior Reporter at PropertyGuru, wrote this story. To contact her about this or other stories email nikki@allproperty.com.sg
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