The index has been moving around the 1,500 level for most of the time, except for the period of mid-October when market jitters caused the index to fall sharply but the recovery came in a matter of only a few days.
Foreign investors turned net sellers of Thai shares in October but remained net buyers of around US$3.3 billion (Bt116 billion) year-to-date. Apparently, foreign investors have begun trimming their risky asset holdings |on the back of uncertainties in the run-up to the Fed meeting tomorrow and Wednesday and the US Presidential election on November 8.
Going forward, we believe that corporate earnings will be in focus for both Thai and global markets.
Coupled with a number of ongoing concerns such as geopolitical tensions, the impact of Brexit, the health of European financial institutions and a possible output cut by major oil producers, the market is likely to see elevated levels of volatility.
We believe an “income portfolio” might be a suitable strategy in view of the global uncertainties. For the Thai market, our high-dividend top-picks are ADVANC, INTUCH, TMT, JASIF, DIF, CPNRF, LHHOTEL, AP, PS, LH, SIRI, SC, BCP and TCAP.
In the overseas market, we like Manulife US REIT, Mapletree Greater China Commercial Trust, Frasers Centerpoint Trust, Ascendas India Trust and IREIT Global. These Singapore REITs offer generous dividend yields of 5.5 per cent-8.6 per cent. We recommend that investors go through our full research reports and understand the accompanying risks before making investment decisions.

Tisco Securities

The Thai market has clawed back most of its early October losses, with the bulk of the recovery occurring in the days immediately after the passing of HM the King. With 3Q earnings starting to be priced in, we expect the SET to be mostly driven by external events for the rest of the year, namely next month’s OPEC meeting, the November 8 US election and potential US Fed rate hike in December. Hence, we continue to maintain our 2016 SET target of 1,490 and see better prospects next year ahead of new elections in Thailand.
Overall, we expect companies to report earnings improvement YoY in 3Q but |trending down QoQ. On a positive note, |bank results have beaten our estimates by |4 per cent. We also expect select transport, tourism and agri/food stocks to perform |well both YoY and QoQ. While property should see YoY earnings improvement, |QoQ is likely to decline due to delayed launches.
Energy sector earnings could be down significantly QoQ thanks to poor refining margins and the absence of stock gains. Telcos are also likely to see lower QoQ earnings on higher expenses (with the exception of DTAC/JAS). Commerce should be up YoY, but QoQ performance is sluggish due to the seasonality effect. Media on the other hand remains stuck in a rut.
Following the government’s relaxation of some rules during the mourning period, we observe that life in Bangkok is starting to return to normal. Some pre-booked events (such as weddings) have been allowed to take place while bars and cinemas remain open (though traffic has fallen sharply). Cable TV operators have managed to side-step the NBTC’s request for round-the-clock commemoration programs. Meanwhile, the initial rush to buy black mourning clothes and memorabilia may lead to a short-term spike in consumer spending.
For telcos, the handset subsidy war |continues unabated through advertising |has been low-key (which may prove advantageous for some operators such as DTAC). Nonetheless, we still expect to see some impact on 4Q16 tourism and consumption. |As a result, any hopes for 3Q earnings momentum to continue into 4Q will likely be dashed.

Research Department
Trinity Securities

After mid-October 2016 for the Thai bourse, it was interesting that small and medium caps distinctively outperformed big caps. From October 13- 25, the SET Index yielded a return of 6.6 per cent, compared to SET50’s 4.7 per cent.
There’s a high possibility for small and medium caps to further outperform big caps until early next year, given big caps under pressure. Commercial banks’ estimated profit could be cut from high loan loss provision and lower fee-based income. Although the energy group will likely see increase in its estimated profit, however, it could not offset that impact.
We see the peak of capital flow has passed through in the 3Q16 and capital inflow is expected to slow down from now, given higher US bond yield and US dollar appreciation. Now, markets continue to weigh only 70 per cent for a possibility of the US rate’s rise. Impacts from LTFs and RMFs inflows could be limited late this year as the SET Index is now relatively high, while extension of LTFs’ holding from five calendar years to seven calendar years. Therefore, investors may not see them as attractive to buy.
LTFs worth about Bt7 billion are expected to see redemption in early 2017, accounting for 15 per cent of total LTFs purchased in 2013 (five calendar years ago). That will directly affect big caps as they are the biggest proportion of LTFs’ holdings. Those purchasing LTFs in 2013 have cost of purchase at the SET Index of 1,406 points with gain of about 6.7 per cent at the index of 1,500 points.
Focus on small and medium caps with upsides. Stock picks: GL, JMT, COM7, JMART, ALT, INET, PYLON, SEAFCO, TTCL, SCI, TPCH, ANAN and RML.