The Thai stock market experienced fluctuations recently, influenced by global events and domestic strategies. On Friday, the market saw a drop of 12 points, or 1%, pressured by trade tensions between the United States and both Canada and Mexico. Despite these pressures, analysts are hopeful for recovery, especially due to the government's announcement of the establishment of the THaiESG X fund. This fund is aimed at encouraging investors to hold onto their investments longer, alleviating immediate sell-offs and stabilizing the market.
According to Mr. Vathan Jittasomneuk, Director of Strategic Analysis at Phai Securities, the introduction of the THaiESG X fund from the existing LTF fund requires investors to commit to holding their units for another five years to benefit from tax deductions. This new fund structure aims to limit downside risks within the Thai stock market, though it doesn’t necessarily create new capital inflows.
Top holdings from the LTF fund include CP All (CPALL), Advanced Info Service (ADVANC), Gulf Energy Development (GULF), Airports of Thailand (AOT), and PTT Public Company Limited. These stocks are expected to continue attracting investment as analysts focus on firms like CPALL, which recently reported strong fourth-quarter earnings.
The report indicated CPALL achieved net profits of 7.2 billion baht, reflecting over 30% growth year-on-year, mainly boosted by solid same-store sales growth and enhanced profitability from its 7-Eleven outlets. Analysts predict a continuing upward trend for CPALL’s earnings driven by sales of ready-to-eat food and personal care items.
This week, key economic indicators will capture investors' focus, including the U.S. manufacturing PMI from ISM and job growth data from ADP and non-farm payroll reports. Forecasts suggest moderate job creation, which could influence market sentiments significantly.
Trading in the Thai market is expected to remain within the 1190–1240 index range, as companies adjust their strategies to remain competitive. Investment strategies are focusing on selecting stocks with lower price-to-earnings ratios and strong market positions across various sectors including retail and banking.
For health care, Bangkok Dusit Medical Services (BDMS) also announced strong quarterly profits, attributing this to rising medical treatment demand and increasing foreign patient revenue, now comprising 28% of its business. This sustained performance showcases the hospital's adaptive strategies to meet patient needs effectively.
Meanwhile, the global economic backdrop remains turbulent, impacting commodity prices and the confidence of local markets. Market reactions to U.S. inflation data have resulted in mixed sentiments among investors, with bond yields moving significantly following reports of U.S. inflation stabilizing at 2.5% year-on-year, causing fluctuations in the dollar index.
The governmental initiatives like the THaiESG X are expected, at least for the short term, to mitigate fears of mass sell-offs and provide some investment stability in the case of negative shocks. While the pressures from external trade relations and commodity prices linger, the focus will be on how these factors influence local sentiment and investment flows.
Overall, as Thailand positions itself within the global economic framework, it is clear these challenges will remain pivotal, but local initiatives and market adaptations show adaptability and growth potential solidifying investor confidence.
The upcoming week will be pivotal as the market digests both local government measures and international economic developments, and whether they can work hand-in-hand to sustain economic recovery.