Krungsri Capital Securities (KCS) has identified 12 strong, undervalued stocks on the Stock Exchange of Thailand (SET) for investors to grab for the long term amid sluggish sentiment and continued outflows.
The Thai stock market has dropped by more than 10% this year, with foreign investors pulling out US$10 billion over the past two years, making the bourse the world's worst-performing equity market.
KCS said this is a prime opportunity to accumulate stocks with strong fundamentals.
According to the brokerage, seven deep-value stocks with strong long-term growth potential are: CP All (CPALL), Bangkok Dusit Medical Services (BDMS), Minor International (INT), Bumrungrad Hospital (BH), Global Power Synergy (GPSC), SCG Packaging (SCGP) and Home Product Center (HMPRO).
Five stocks in the banking and property sectors are also recommended: Kasikornbank (KBANK), Krungthai Bank (KTB), Bangkok Bank (BBL), AP Thailand (AP) and Sansiri (SIRI).
The Finance Ministry is expediting the launch of a second Thai ESG fund with a fund size of roughly 180 billion baht, meant to accommodate transfers of long-term equity funds (LTFs) that matured.
While the investment structure and tax benefits are under discussion, the second Thai ESG fund is expected to maintain its focus on equity domestic investments.
KCS views the launch of a second Thai ESG option as a positive factor for the local stock market, helping to absorb LTF-related selling pressure and inject new liquidity, which should be beneficial for long-term LTF investors.
A potential long-term boon to the bourse is the expansion of potential tax incentives, noted the brokerage.
"If the tax-deductible limit for Thai ESG investments increases from 300,000 baht to 500,000 baht, matching the previous LTF structure, it could lift investment and market confidence," KCS said in a research note.
Analysts expect the second Thai ESG fund will invest 100% in Thai stocks, with an expanded ESG stock criteria that should increase investment opportunities and diversification.
Over the past five years, the Thai stock market has been pressured by sluggish economic growth and a lack of long-term capital inflows after the expiration of LTF tax incentives in 2019.
"If the government implements clear measures to support domestic investment through such funds, it could gradually help the SET index recover," noted the brokerage.
