(Original title: Xiaomo: China’s economic restart boosts Thailand’s tourism growth Thai stocks are expected to rise another 7% this year)
Zhitong Finance APP learned that better-than-expected tourism growth brought about by the reopening of China’s economy and the potential to stimulate domestic consumption in Thailand have made Thailand’s stock market JPMorgan’s top choice in Southeast Asia. Kae Pornunnarath, head of equity research at JPMorgan in Thailand, said that historically, the stock market tends to rise before general elections in Thailand, and the continued expansion of corporate profit margins brought about by lower energy and raw material costs will also help Thai stocks outperform the region ( Excluding Vietnam) large plates.
The arrival of Chinese tourists will help Thailand double tourism revenue to $39 billion this year, equivalent to about 6 percent of Thailand’s gross domestic product (GDP), according to JPMorgan. The bank estimates that the total number of foreign tourists will surge to 26 million this year, accounting for about 65% of the total in 2019, the year before the outbreak.
“We are very optimistic about China’s reopening. When we think about tourism, that’s where Thailand stands out,” Kae said in an interview.
JPMorgan Chase expects Thailand’s benchmark stock index SET Index to rise further by about 7% this year to a record high of 1,800 points, and continues to maintain an “overweight” rating for the country’s consumer staples, consumer discretionary and healthcare sectors.
It is understood that Thailand’s SET index has risen by about 4% in the past month, boosted by gains in electronics, energy and consumer staples stocks. Compiled data showed a net global inflow of $566 million into Thai stocks this month after a record $5.96 billion last year.
In the past three months leading up to general elections, Thai stocks have risen an average of 5-6 percent before some profit-taking, Kae said. Thailand is scheduled to hold general elections in May and the House of Representatives will end its term in March.
Stocks recommended by JPMorgan include convenience store operator CP All Pcl and building materials and home improvement retailer Home Product Center Pcl, as domestic demand will remain strong. The bank also favors utilities such as Global Power Synergy Pcl, which are seen as “defensive” stocks against a global economic slowdown, Kae said.
However, while the return of Chinese tourists is seen as a boon for the aviation industry, the valuation and share price of Airports of Thailand Pcl have priced in investor expectations, with “limited” upside, Kae noted.
Wendy Liu, chief equity strategist for Asia and China, said: “When we see positive spillovers from cyclical gains — the reopening of China, and to some extent Japan — Thailand and Hong Kong will be main beneficiary.”
