On April 7, 65, Mr. Sukit Udomsirikul, Managing Director, Chief Research Officer of SCB Securities Company Limited (SCBS), said that rising energy costs led to a move to more austere monetary policy. It has slashed growth forecasts and made the path of economic growth more uncertain. This will result in the economic cycle changing from reflation to stagflation.
While the chances of a recession in 2022 are greater, there will be a mild recession as the current global economy is not so imbalanced that it needs to be balanced along with easing. Travel restrictions and opening countries 2022 SET Index target based on fundamentals of 1660 points, buy at 1,550-1,600 points, while take profit levels are above 1,780 points.
The SET is expected to correct slightly in 2Q22 to absorb the risks of stagflation, while the second half will see better momentum supported by openness and post-COVID recovery. Coupled with last year’s low base, there is a high probability of a Sell in May event. The decline is a good opportunity to build a position as the Thai economy appears to be experiencing quasi-reflation in the second half of the year. 65
On the Thai economy, the direct impact of the Russian crisis may not be much. But the indirect effect through rising oil prices will have a greater impact on inflation and monetary policy. The energy crisis puts the global economy and the Thai economy at risk of stagflation in the next 3-6 months. Tighter monetary policy is a policy risk that could push the economy into recession over the next 12 months.
The Thai economy is likely to expand at a lower rate than previously expected of 3.63%, while the risk of stagflation is higher. The transmission risk is likely to be at a manageable level. But the risk of transferring and restructuring investment portfolios may take time to manage.
SCBS views that passive stocks will continue to outperform. Upstream energy stocks are a good option to hedge against high inflation. They still prefer quality stocks with low beta to mitigate the impact of volatility.
Investment Strategy Looking at the outlook for 2022, focusing on macro and micro themes: 1. Stocks with high pricing power. (High and stable margin) 2. Stocks that benefit from opening the country.
3. Reasonably priced growth stocks and 4. Quality stocks Weight gains in passive stocks to stay cautious during times of high uncertainty, believing that domestic stocks with high pricing power and balance sheet Strong is likely to gain more attention than stocks based on global economic cycles.
It is also more likely to be affected by the global economic slowdown than domestic stocks. It also focuses on stocks that can cope with high oil prices and inflation. The top stocks in 2Q22 are AOT, BDMS, CRC, GULF and PTTEP.
AOT : Representing the Thai tourism industry The performance is expected to recover from the plan to move forward to open the country, while the valuation is interesting after the current share price is still trading 12% lower than before the covid.
BDMS : Well tolerated market volatility and has a strong fundamental. Expect earnings to grow 21%YoY in 2025 on the number of patients. Both Thais and foreigners increased after the COVID-19 situation eased.
CRC : Earnings are expected to grow the best in the commercial sector in 2022, driven by recovering retail sales and rental income. proactive branch expansion and improved profit margins as the economy recovers and there is no lockdown.
GULF : Profit outlook will continue to grow due to the new IPP power plant capacity with low energy cost risk. and expanding the business to new businesses especially digital business
PTTEP : Benefit from rising oil prices Latest Brent crude oil price +5.3%DoD WTI +5.2%DoD after market concerns about tight oil supply from Kazakhstan CPC’s suspension of oil exports damaged by the storm.
