Strategy Note / Global

Thai Market Strategy: Short-term pressure before upswing later this year

  • Equity yield gap for 2021 still in cheap space
  • SET forecast upgrades could start soon (slashed 41% YTD)
  • Focus on earnings quality, value, and laggard plays in 4Q20

The market is likely to be range-bound in the short run with limited downside, supported by sustained economic recovery data and news of vaccine development progress. The SET should resume an uptrend later this year, driven by regained confidence over business recovery momentum and potential earnings forecast upgrades. Uncertainty over the upcoming US presidential election (and US-China tensions) may also keep EMs volatile. Clarity afterward should steer the equity market back to an uptrend, along with expectations of a post-COVID economic recovery.

Our base-case end-June SET target is 1404 (trimmed from 1454 previously, 2021E EPS of 87), a 4.5% discount to our YE21 target of 1470 (a PER of 17.5x, EPS of 84).

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