The upcoming general election will have a moderate-positive impact on Thai equities, says John Woods, chief investment officer of Credit Suisse Asia-Pacific.
Woods: Election is moderate-positive
"Our outlook is based on the assumption the election is going to be carried out and managed according to schedule," he said.
Credit Suisse predicts that the global economy is at the end of its growth cycle but it doesn't see signs of a recession starting in 2019, Mr Woods said.
He said the baht, which has risen 2.7% year-to-date against the dollar, has probably seen the bulk of its appreciation already and will likely remain stable for the rest of the year.
The baht has been the best performer in Asia year-to-date. Credit Suisse remains neutral on the baht compared with the US dollar, projecting 33 for three- and 12-month periods.
Although a strong baht could hurt exports, Mr Woods expects tourism growth and the resulting economic boost to offset any negative impacts.
Thailand saw comparatively strong bond and equities inflows in January.
"Flows can come in, but they could leave just as quickly," Mr Woods said. "However, to the point there was substantial outflow last year, it's very positive that the Thai story is being more positively perceived by foreign investors."
Credit Suisse remains neutral on Thai equities. Mr Woods said they are most attractive when risk is high, as a relatively safe but expensive investment. "Thailand is a bit of a defensive play when volatility tends to rise," he said.
East Asian markets, especially South Korea, are outperforming because last year they were some of the worst performers. Flows are now returning.
Mr Woods said East Asian economies do well when the market is bullish about external trade, while Southeast Asian countries do better when the markets are concerned about trade.
Credit Suisse expects the Bank of Thailand to keep the policy rate unchanged for much of 2019.
