After the Thai stock market soared dramatically within just two weeks after the election, accompanied by foreign investment inflows exceeding tens of billions of baht, the index rose and began approaching the key 1,500-point level that many are eagerly watching to see if it can be surpassed.
However, recently signs of a pullback and profit-taking selling have appeared, with today’s SET Index closing the morning session at 1,483.95 points, down 9.96 points or 0.67% from the previous day’s close. This raises the crucial question of whether this current correction is just a short-term pause before continuing upward, or if the index has already risen to a "too expensive" level.
Phra-dorn Tiernapramote, Research Director at Asia Plus Securities Company Limited, shared with Thairath Money that the overall market pullback this morning mainly stems from two key factors:
1. Encountering significant resistance and profit-taking selling.
After two weeks post-election, the Thai stock index has risen continuously by 120 points, with foreign capital (Fund Flow) inflows exceeding 40 billion baht.
This rapid rise has produced one of the highest returns globally. The swift surge brought the index close to the highest level in 1 year and 4 months — the period of the Vayupak Fund in October 2024 — making this a significant resistance level and triggering short-term profit-taking selling.
2. Pressure from international stock markets.
It is observed that the Thai stock market has pulled back following global stock trends. The U.S. stock market declined the previous day, and most Asian markets also fell this morning, such as Japan down 1.3% and Hong Kong down 0.6%.
Nonetheless, this pullback is viewed as a short-term profit-taking consolidation, with the overall market expected to enter a sideways trading phase before gradually moving higher in the next period.
Phra-dorn said that from a fundamental perspective, at the current index level around 1,480 points, the market’s P/E ratio is about 16 times, P/BV at 1.4 times, and dividend yield relatively high at 3.8%. It must be acknowledged that the rapid market rise has made prices "somewhat more expensive than before."
However, when comparing the attractiveness with foreign markets via the Market Earning Yield Gap (MEYG), the Thai stock market remains quite appealing.
Thailand’s MEYG stands at a wide 4.1%, whereas the U.S. market is negative at -0.37%. Therefore, comparatively, the Thai stock market is still an attractive destination for capital flows.
Asia Plus Securities currently maintains a preliminary index target of 1,510 points, with potential for further upside supported by key factors:
1. Quarterly earnings likely to be strong, with registered companies’ profits expected to potentially double compared to the same period last year, which had a low base. The past four quarters’ earnings have consistently outperformed market expectations, providing additional upside for the market.
2. Oil prices have risen over 16% in just over a month, directly benefiting the Thai stock market, where commodity-linked stocks make up about one-third of the market.
3. The return of foreign capital inflows, with recent signs showing about 50 billion baht flowing back in. There remains significant room for more fund flows to return, shifting from growth stocks to more value-oriented stocks.
, Phra-dorn noted that the most significant risk factor currently is "political stability after the election."
The market expects the government formation to follow the timeline, achieve a strong majority, and be able to push policies into action effectively to stimulate GDP growth.
If government formation is delayed, lacks a majority, or policies are unclear and unable to revive the economy as in the past two years, it would pressure the index to decline and could slow down the strong fund inflows.
Regarding concerns about election annulment, if the verification process follows scientific and legal mechanisms without abnormalities, it is believed this issue will be resolved.
Given the strong index rise, Phra-dorn assesses that the 1,430-point level is a very strong support, as it represents the average cost base of foreign investors who have gradually accumulated shares in this round.
The recommended investment theme is to focus on stocks whose prices have not risen as strongly as the overall market (laggards) but have continuous buying accumulation from foreign investors, which will help push their prices upward along with fund flows.
Top recommended stocks include BDMS, CPN, MTC, CBG, AMATA, GUNKUL, and SJWD, among others.
Read stock and investment news with Thairath Money at
Follow the Thairath Money Facebook page at this link