Kasikorn Asset Management (K-Asset) is advising investors to adopt a more selective approach to Thai equities after the benchmark index recently topped 1,600 points, saying the Thai bourse has already priced in many of the positive factors.
Managing director Wajana Wongsupasawat said the Stock Exchange of Thailand (SET) is now trading at around 16 times earnings despite limited growth prospects for both corporate profits and the domestic economy.
According to K-Asset, the SET's earnings per share have been capped at around 95 baht over the past decade and are expected to remain near that level this year.
Meanwhile, the Thai economy is projected to expand by less than 2% annually over the next 1-2 years, making current valuations appear increasingly stretched, he said.
K-Asset also highlighted market concentration risks, noting recent gains have been driven primarily by a handful of large-cap stocks in technology-related and specialised sectors, rather than by broad-based participation.
While foreign capital has been returning to Asia, Thailand has attracted a smaller share of inflows than technology-driven markets such as Taiwan and South Korea, which are key beneficiaries of the global artificial intelligence (AI) boom.
Against this backdrop, K-Asset recommends focusing on high-dividend stocks with strong balance sheets, stable cash flows and low debt levels.
The banking sector remains attractive, offering dividend yields of 5-6%, while industrial estate operators continue to benefit from rising foreign direct investment. Electronics companies are also expected to benefit indirectly from global AI-related demand.
The firm also sees opportunities in Thai real estate investment trusts, which offer dividend yields of 6-8% and could benefit from a global interest rate cycle that appears to be nearing its peak. K-Asset maintains a positive outlook on global investment-grade bonds, supported by expectations that US policy rates are approaching their terminal level.
"We advise investors to diversify their portfolios and increase the weighting of global equities relative to local stocks to capture better returns over the long term," Mr Wajana said.
RETIREMENT READINESS
Beyond near-term market constraints, K-Asset is positioning itself to address a longer-term challenge by focusing on the retirement readiness of Thais.
Executive chairman Win Phromphaet said the company launched "Life Path Solution" for provident fund members, aiming to help investors navigate longer life expectancy and inadequate retirement savings through automated portfolio management.
The solution follows a lifecycle investment approach, automatically adjusting asset allocation according to a member's age. Investors aged 25-45 are allowed to allocate up to 85% of their portfolios to global equities to maximise long-term growth potential. Exposure to risk assets is gradually reduced as retirement approaches, helping to preserve capital and reduce volatility.
At the core of the strategy is the K-WPULTIMATE fund within the K-WealthPLUS Series, which employs a dynamic asset allocation approach across global equities, fixed-income securities and alternative investments.
Despite geopolitical tensions and market uncertainty, K-WPULTIMATE has delivered a gain of roughly 9% year-to-date.
Life Path Solution also addresses common behavioural investment challenges, including poor market timing and a lack of long-term investment discipline, by removing the need for members to actively manage their portfolios.
Initial adoption has been encouraging, with assets under management (AUM) from individual participants rising 54%, the number of members increasing by 30%, and participating companies growing 14%, reflecting rising demand for structured retirement solutions as Thailand becomes an aged society.
K-Asset has provident fund AUM of 278 billion baht and aims to reach 300 billion by year-end.
Total AUM amounts to 1.9 trillion baht, and the firm's target is 2 trillion baht by the end of this year.
