The Stock Exchange of Thailand (SET) index in 2019 could surpass the all-time high reached last year, buoyed by lower external risks and slower interest-rate normalisation by the US Federal Reserve, says SCB Securities (SCBS).
Despite projecting a base-case scenario for the SET index of 1,850 points, SCBS reckons the bourse could reach 2,000 if propelled by foreign capital inflows, rising interest rates and higher food prices, said senior vice-president Pornthep Jubandhu.
"The signals of slower interest rate normalisation by the Fed will terminate the US dollar appreciation, which is good for emerging market economies," Mr Pornthep said. "In addition, the narrower gap of economic growth between the US and emerging countries will induce capital flows to return to emerging countries.
"Market concerns over the Sino-US trade disputes, the uncertainty of the Brexit negotiations and a slower pace of US rate hikes have eased, resulting in lower pressure in emerging markets."
The SET index kicked off 2018 with a bang, later soaring to an all-time high of 1,838.96 points. But the bull run dissipated and the benchmark gauge closed at 1,536.88 on Dec 28.
Mr Pornthep said a slowdown in global economic growth does not imply a new financial crisis, but rather reflects how economic growth has entered an average growth ratio for the long run.
The global purchasing managers' indices for the manufacturing and service sectors remain above the 50-point level, mirroring the continuous growth in the global economy, he said.
For Thailand, private investment has shown signs of recovery in the form of demand for loans of all types, sizes and lending terms, according to the credit conditions report by the Bank of Thailand.
The recent policy interest rate hike also helps narrow net interest margin, Mr Pornthep said.
"My biggest domestic concern is tourism, followed by exports," he said. "However, there are some signals showing a recovery in tourist numbers during the last two months of 2018, and there is high opportunity that the tourism industry will recover by this year's second quarter."
Three major cycles are likely to support domestic investment sentiment in the first quarter, according to SCBS.
They are foreign direct investment in Thailand supported by the relocation of production bases by Chinese manufacturers to avoid effects from the Sino-US trade dispute; rising interest rates helping banks to gain from better net interest margin; and a mild El Nino causing pork prices to climb, Mr Pornthep said.