Analysts recommended electronic-food sectors such as CPF, HANA, KCE, TU and SAT for investment to prepare for Thai baht depreciation as the Bank of Thailand is set to implement additional finance measures today (Nov 20) in order to control the rapid appreciation of Thai baht. However, warning that the Thai baht depreciation could lead to a short-term effect on flow of international funds into the Thai market.
DBS Vickers Securities (DBSVS) assessed that there is a tendency of speculating on exports stocks such as electronic and food sectors after the prices have been continuing downward since it was signalled to obtain a benefit from Thai baht weakens. The recommended stocks are Charoen Pokphand Foods Public Company Limited (CPF), Hana Microelectronics Public Company Limited (HANA), KCE Electronics Public Company Limited (KCE), Thai Union Group Public Company Limited (TU). Note that the baht depreciation will be negative for foreign investors on Thai stock market.
Asia Plus Securities (ASP) stated that Thai baht weakening will pressure an offshore fund flow decelerates in the short-term. In the past 7 months, Thai baht has strengthened by 7.4%, prompting the Bank of Thailand (BOT) to issue measures to manage and limit the currency appreciation in order to support the exports sector, which accounted for 68% of GDP.
However, as Thai baht weakens, foreign investors would hesitate to invest in Thai market due to a high risk of loss from the FX rate, leading to a decline in international fund inflows in the short-term.
For investment themes, ASP suggested to invest in strong fundamental exports stocks, benefiting from baht depreciation such as CPF, Sri Trang Gloves (Thailand) Public Company Limited (STGT), Somboon Advance Technology Public Company Limited (SAT).