Over the past week, the SET index has established a new base at around 1,610 points after earlier gains. The market focused mainly on the remaining third-quarter results of listed companies.
Among the companies covered by Bualuang Securities, combined earnings were up 13% year-on-year (but down 33% quarter-on-quarter), reflecting the recovery of companies impacted by Covid, rising oil and gas company profits and a strong recovery in tourism.
The drop in profits from the previous quarter reflects a significant loss of inventory and tighter gross refining margins at oil and gas companies, and lower Covid-related revenue from companies in the health sector. Shares of companies posting earnings below expectations (such as CBG) sold off.
Meanwhile, investors bought back shares of some companies that provided clear positive indications (such as SCGP) after reporting their earnings.
We expect the SET to remain in consolidation mode over the coming week. Support is set at 1610 points, while resistance is at 1630 and 1640.
Many companies will be meeting with securities analysts this week, so expect potential portfolio adjustments by institutional investors once they take a closer look at third-quarter earnings details and the fourth-quarter outlook.
Cash drain could also be an issue as some major initial public offerings (IPOs) are underway and some investors will be looking to set aside funds for share subscriptions.
Additionally, many companies are expected to switch to XD, including JASIF, TASCO, GUNKUL, RCL, and EPG. The prices of stocks that trade immediately after the distribution of dividends sometimes fall; therefore, the market may not return to a recovery phase in the short term.
Following company meetings over the past week, securities analysts have digested management advice and updated outlooks for the fourth quarter and 2023 for investors to adjust their portfolios accordingly. Among the main investment targets are companies that have offered positive advice and whose share price is below the market. Companies due to hold analyst meetings this week include PTT, AIT, AH, BGRIM and ITEL.
Among the positive economic indicators expected this week is Thailand’s official third-quarter GDP, which is expected to improve to 3.1% year-on-year from 2.5% year-on-year in the second quarter. Elsewhere, inflation figures in Singapore and Japan are expected to trend lower. The German Purchasing Managers’ Index (PMI) is expected to show a slight improvement but will remain weak, while the US PMI is expected to be higher.
It is also worth watching the positions of various countries after the APEC and G20 meetings this week for any signals of new initiatives or a significant change in direction.
Among the negative factors, risk weighs more heavily on investment sentiment as the SET approached key resistances. Certain factors can trigger profit taking on certain stocks. They understand:
Quick appreciation of the baht: Since foreign funds poured into the local stock exchange when the baht was weak at 37-38 per US dollar, foreign investors now have the opportunity to profit from both capital gains and foreign exchange gains and can take profits in the days and weeks to come.
Post-Apec Domestic Policy: Political analysts expect clearer signals from major parties and key figures ahead of the general election. Once the country’s international showcase is over, experts believe a dissolution of the House could happen anytime between now and March, and is beyond the markets’ ability to predict.
Liquidity purge: Portfolio adjustment by institutional investors and IPO subscriptions with substantial market capitalization could affect fund allocation.
Negative external factors include recession fears in key economies such as the United States and the Eurozone. Investors should keep an eye on the PMI readings, which are still hovering around the 50 level that separates expansion from contraction. In addition, energy and commodity prices remain volatile, mainly due to the impact of the war in Ukraine. Energy prices could become a bigger issue depending on how the conflict unfolds during the winter months.
Other dramatic moments of international tension could arise from time to time, with North Korea and China-Taiwan being key examples, which could keep investors’ risk appetite at bay.