3Q2017 GDP of 4.3% y/y grew much stronger and at its fastest pace since early 2013 when it chalked up 5.2% y/y growth. The data suggests that the economy is catching up. Going forward in 2018, we expect the economy to remain healthy supported by exports, tourism, government infrastructure spending and better consumer spending. We anticipate that the fiscal and monetary policies will remain accommodative to ensure macro conditions are stable. Hence, we now project the GDP to grow around 4.0% in 2018.

We expect the Thai equity market to be attractive in 2018. Better macro data, low interest rate environment, improved corporate earnings, and a still low foreign presence at less than 30% of total market capitalization provide positive catalysts We see consumer-related companies benefiting from the change in the earnings growth momentum from cyclical sectors like agriculture and tourism which are expanding and will now feed positively into consumer income. The budget allocations for Thailand’s seven-year infrastructure investment plan in the 2H2017 will also act as a tailwind for corporates within the industrial and construction-related sectors. Meanwhile, the risk of volatility coming from the political noise remains in the cards especially if the noises are loud, leading to a further delay to the November general election.

• 3Q2017 GDP of 4.3% y/y grew much stronger and at its fastest pace since early 2013 when it chalked up 5.2% y/y. GDP growth for 2Q2017 was higher at 3.8% y/y from 3.7% y/y in 1Q2017. We now project the full-year GDP to be around 3.9% from our previous forecast of 3.7%

• The data suggests that the economy is catching up supported by exports and tourism from China. The end of a year-long mourning period for King Bhumibol Adulyadej will improve consumer spending in 2018, while the government is ramping up spending on infrastructure projects to support growth.

• Going forward in 2018, we expect the economy to remain healthy. Exports will continue to do well, helped by strong global demand. The tourism sector is poised to remain strong. A planned rise in government infrastructure spending should also help. Thus, we now project the GDP to grow around 4.0% in 2018.

• We anticipate that the fiscal and monetary policies will remain accommodative to ensure macro conditions are stable. We feel there is no immediate need for Bank of Thailand to raise interest rates as wages are still weak with debt burden for households and firms still elevated and NPLs on the rise.

• We remain positive on the Thai equities market. In tandem with an expanding economy, the equity market will be attractive in 2018 supported by better macro data, low interest rate environment and stronger corporate earnings. Foreign presence is low at less than 30% of total market capitalization, below the seven-year trailing average of 32.5%.

• We expect consumer-related companies to benefit from the change in the earnings growth momentum from cyclical sectors like commodities and domestic sectors. The reason being contribution from both the agriculture and tourism sectors’ expansion will now feed positively into consumer income. Also, the disbursement of budget allocations for Thailand’s sevenyear infrastructure investment plan in the 2H2017 will also act as a tailwind for corporates within the industrial and construction-related sectors.

• Meanwhile, the risk of volatility coming from the political noise remains in the cards. Although the general election should take place in November 2018 which could take some domestic political concerns off from the foreign investors’ mind, the potential risk from political uncertainties ahead of the 2018 general election would cause volatility especially if the noises are loud, leading to a further delay to the election.

Source: AmInvest Research - 21 Nov 2017