The Thai stock market has rebounded strongly after touching a recent low of around 1,157 points on March 13. Oversold indicators, even surpassing Covid-era lows, triggered buying that pushed the SET index back towards the key 1,200-point mark.
Petrochemicals emerged as the rotation leader, given deeply discounted valuations and improving commodity market signals, particularly refining margins and petrochemical spreads. Banks also gained momentum, boosted by optimism around former prime minister Thaksin Shinawatra's proposal for asset managers to purchase bad household debt.
However, the power generation sector continued to face headwinds, also created by Thaksin, who renewed a call to drive power tariffs down to 2.50 baht a unit, or 40% below the current rate of 4.15 baht. However, market scepticism about the feasibility of such a drastic cut limited the impact, as energy analysts have said 3.70 baht is about as low as rates can go at the moment.
Meanwhile, speculation increased ahead of the suspension of trading shares of GULF and INTUCH (in effect from March 21 to April 2), with the merged entity GULF NewCo set to begin trading on April 3.
In the coming week, the Stock Exchange of Thailand may continue experiencing short-term volatility driven by asset-class rebalancing, following the US Federal Reserve's widely expected decision to leave its key interest rate unchanged. Nevertheless, the broader trend suggests an upward bias, albeit punctuated by periodic profit-taking pressure.
Investors are encouraged to adopt a selective approach, focusing on individual stocks rather than broad index movements, as share prices of numerous companies have corrected significantly beyond justified fundamental valuations.
Prominent opportunities are evident in stocks such as BGRIM, SCGP, CPALL, AAV, BDMS, PLANB, SCC, BCP, MONO and STECON, which appear undervalued following excessive declines. Both contrarian investors and long-term accumulators have begun returning to these positions, signalling a potential rebound in the coming weeks.
SELLING PRESSURE EASING
Among the positive factors expected to support the market is eased selling pressure following initial reactions to the newly introduced tax-saving Thai ESGX fund. Although the initial response was tepid, particularly due to concerns about locking up entire long-term equity fund (LTF) holdings when transferring from existing LTFs, we expect selling pressure will subside next week.
Furthermore, investors may anticipate short-covering activity and renewed buying interest in deeply discounted sectors -- particularly energy, power plants, refineries, petrochemicals and packaging companies -- alongside continued strength in banking stocks that offer stable dividends and solid fundamentals.
An additional supportive element is the recent trend of analysts' upgrades from international brokerage houses, focusing specifically on deeply oversold stocks with compelling valuations. This aligns with renewed net foreign buying activity, reversing a three-week outflow streak and potentially boosting sentiment further.
EXTERNAL RISKS
However, significant risks remain on the radar, especially on the external front. Key economic indicators from the US -- specifically fourth-quarter GDP and core personal consumption expenditures inflation data -- will provide important signals about the Fed's future policy path, with potential impacts on global investor sentiment. Any surprises to the downside on GDP or renewed upward pressure on inflation could trigger increased volatility across global markets.
Geopolitical uncertainties continue to overshadow global sentiment, particularly with ongoing proxy conflicts involving Ukraine and Russia, where recent diplomatic attempts have yielded limited progress. Tensions in the Middle East have simultaneously intensified, adding another layer of complexity.
Global trade tensions remain a critical risk, particularly as US President Donald Trump prepares to announce significant reciprocal tariff decisions on major trading partners by April 2. Investors should carefully monitor developments, as any escalation could further increase volatility.
