The Stock Exchange of Thailand continued to decline in March, but the fall was much smaller than in the first two months of the year.
The SET index started March at 1,203.72 points before ending the month at 1,158.09, declining 45.63 points or 3.8%.
The key drag on the market was fear related to the trade war ratcheted up by US President Donald Trump. In early March, Trump announced immediate 10% tariffs for Canada, Mexico and China. This heightened global market fears, including in the US.
In Thailand, political conflict heated up with a no-confidence debate taking place in late March. Although there were no big changes for the coalition parties, we observed some inner conflicts.
On March 28, a massive earthquake centred in Myanmar shook Bangkok. Confidence was dented, especially in the fragile property market, and negative sentiment affected the tourism industry as well.
The SET closed down 1.5% on the last day of trading in March. Average daily turnover plummeted 26% from the month before to 38.1 billion baht.
On April 2, Trump announced tariff rates for more than 80 countries that shocked the world. The highest rate was 49%, while a 10% base was announced for all countries.
Thailand faces a 36% tariff rate for all goods imported by the US, much higher than most economists predicted and exceeding the rates applied to many other countries.
The new tariff rates triggered a revived trade war, slated to start from April 9 for all countries. Dozens of affected countries formed negotiating teams and began making approaches to Washington, but progress appeared difficult.
Beijing quickly countered by slapping a 34% tariff on products from the US, matching the initial 34% tariff charged on imports from China to the US. Trump subsequently increased the tariff on China to 104%, further dampening investment sentiment.
Then investors sighed in relief on April 9 after Trump announced a 90-day pause on the reciprocal tariffs for all countries except for China.
All assets remain down heavily, especially global stock markets and oil prices, and the trade war is stoking fears of economic recession worldwide.
Thailand is in the queue for negotiations, but if the tariff rate stands at 36%, the country's GDP growth could be reduced to around 1.5% this year as exports account for 80% of GDP and the US represents 18% of total export value.
Furthermore, the recent earthquake could further depress GDP as some tourists already cancelled trips to Thailand.
APRIL STOCK PICKS
Our current investment theme focuses on stocks with solid fundamentals, domestic-focused businesses and a good near-term outlook. We picked the trading firm Berli Jucker (BJC), the mall developer Central Pattana (CPN), the home improvement retailer HomePro (HMPRO) and Siam City Cement (SCCC).
- BJC is our top pick in the commerce sector. We believe the company is on the right track after shifting its focus to fresh food since last year to improve margins. This year, it should improve its margins by another 20-40 basis points. Cost savings are also expected to reduce the ratio of sales and administrative expenses to sales by 10-20 basis points. The company plans to add seven large-scale Big C stores, 200 mini-stores and to restore 17 existing stores to improve efficiency. The fourth round of the government's digital wallet stimulus should make an impact in the middle of this year.
- The property and mall giant CPN has completed renovations of a number of its shopping centres and targets a long-term compound annual growth rate of 10%. Management clarified that its recently opened property in the Lat Phrao area would not cannibalise its existing mall nearby. Rather, it will capture new opportunities in the area where demand remains strong. CPN will also continue to add assets to its real estate investment trust every two years, aiming to increase asset value by 20 billion baht per year.
- In the home improvement space, HMPRO recently announced a share buyback of up to 7 billion baht or 800 million shares, bolstering share price sentiment. Moreover, we believe HMPRO will benefit from renovation demand post-earthquake as many houses and condos were badly damaged and need improvement. The company targets same-store sales growth of 2-3% this year with revenue growth of 5-7%. Growth will be more pronounced in the second half of 2025, while the first half should be stable.
- SCCC entered the spotlight after cement prices recently increased by more than 400 baht per tonne. Although the increase may not be permanent, it will benefit the company in the short term. SCCC will also benefit from a post-earthquake demand increase. Moreover, we believe the government will increase its spending on infrastructure projects to lift the economy this year. SCCC is a high-yield company with an expected yield of almost 7% per year.
