Foreign investors are expected to switch between buying and selling domestic equities this month as there is a clearer impact from the Sino-US trade row, says Asia Plus Securities (ASP).
The projection is in line with statistics from the past five years, where foreign investors were net sellers of Thai equities worth an average of 8.03 billion baht in October, said ASP senior executive vice-president Poranee Thongyen.
The lack of progress in negotiations between Washington and Beijing over their trade rivalry means there's a good chance the current roster of tariffs on US$250 billion (8.1 trillion baht) of Chinese goods exported to the US will grow, as US President Donald Trump has threatened, said Bloomberg.
But a recovery in oil prices and clearer developments on Thailand's general election timeline are expected to continue supporting upside gains in the Stock Exchange of Thailand (SET) index, she said.
Investment return from the SET index during the past five years averaged 2.27% in October, according to ASP.
Foreign investors were net buyers of Taiwanese equities worth US$1.48 billion (47.7 billion baht) in September and August, said Mrs Poranee.
On the contrary, foreign investors were net sellers in four regional stock markets -- South Korea, Indonesia, the Philippines and Thailand -- in those two months.
Thailand recorded the highest foreign sell-off at $236 million in those months, but clearer developments on Thailand's general election timeline helped to reduce foreign capital outflows, she said.
If SET-listed firms can generate profits in line with market expectations, this will help attract foreign fund inflows into the Thai capital market as Thailand's economic fundamentals are stronger than its regional peers, said Chavinda Hanratanakool, chief executive of Krungthai Asset Management (KTAM).
Thailand's GDP growth is expected to be 4.2% in 2019, mainly driven by government spending and other domestic factors as exports and overseas demand are projected to decrease with an escalating trade war, said KTAM chief investment officer Veera Vutthikongsirigool.
As the general election nears, KTAM forecasts the SET will rise to 1,820 points early next year, with earnings growth at 10% and 16.4 times for a price-to-earnings ratio, said Mr Veera.
Separately, KTAM has launched KT-Brain, an investment fund using artificial intelligence (AI) to select Thai equities with a higher expected return than the SET index's total return. The AI system will pick 40 stocks from the SET's total of 731, selecting factors such as companies' ability to generate net profit, liquidity ratio and working efficiency ratio.
The fund manager is still responsible to examine securities and weight them as per fund policy, said Ms Chavinda.
