Thai stocks continue to face selling pressure driven by stalled economic growth, weaker than expected listed company earnings, escalating domestic political tensions and US import tariffs, says Tisco Securities.
However, the brokerage said Thai stock prices are becoming attractive for medium- to long-term investment.
Apichart Phubancherdkul, head of strategy research at Tisco Securities, said the Thai economy may struggle to achieve 3% growth this year, primarily due to weakening domestic consumption and continued slump in the manufacturing sector driven by intensifying competition from lower-cost imported products.
Thailand also faces increasing risks from potential US tariff hikes, as President Donald Trump has signalled plans to implement reciprocal tariffs to adjust import duties to match the rates that trading partners impose on American goods.
The average tariff Thailand imposed on US goods is roughly 6%, while the US charged Thai products with a rate of less than 1%, according to Tisco.
In 2023, Thailand recorded a US$40-billion trade surplus with the US -- the 11th largest among America's trading partners that have recorded a surplus. This puts Thailand at significant risk of facing retaliatory tariffs, as the second-most vulnerable Asian nation after India.
Investors should closely monitor Thai-US trade negotiations which will be crucial over the coming months, said Mr Apichart.
Another negative factor is weaker than expected earnings of Thai listed companies in the final quarter of 2024. According to Tisco, 47% of companies reported earnings below market expectations, with 23% meeting expectations, and 30% exceeding expectations.
This has led to a continued downward revision of the Stock Exchange of Thailand (SET) index earnings estimates. Since the beginning of the year, earnings per share of Thai stocks have dropped by 2.4%, continuing the decline recorded last year.
In addition, domestic political tensions are expected to intensify this month, driven by constitutional amendment debates and the no-confidence motion against the government.
Despite the market downturn, Tisco views that medium- to long-term investors may find attractive opportunities in fundamentally strong stocks trading below fair value. Blue-chip stocks across various sectors in particular could benefit from the transition from long-term equity funds to Thai ESG funds.
Tisco's stock picks are Bangkok Dusit Medical Services (BDMS), Home Product Center (HMPRO), Minor International (MINT), Krung Thai Bank (KTB), PTT, Amata Corporation (AMATA) and Supalai (SPALI).
The securities firm also expanded investment options for those interested in foreign stocks via depository receipts (DRs) and fractional depository receipts (DRx). The firm views China's recent parliamentary sessions as a key turning point, signalling a shift toward boosting domestic consumption and investment, alongside progress in chip development.
For March, Tisco views a key support for the SET index of 1,150 points, with resistance at 1,250, said Mr Apichart.