Investments hinge on US election result

Investors are advised to keep an eye on the US election results on Nov 5 as it is likely to impact global investments and create volatility in stock markets, according to Asia Plus Securities (ASPS).
ASPS recommends investors focus on stocks with low volatility and those expected to report healthy performances for the third quarter of 2024.
Other factors to monitor this month are the US Federal Reserve’s indication of a slower pace of interest rate cuts and rising geopolitical risks that could influence investment decisions.
ASPS outlined a cautious investment strategy for November, recommending investors steer clear of volatile stocks that may be affected by the US election, especially given the Republican Party’s recent surge in popularity.
The possibility the Fed and central banks worldwide may delay interest rate cuts could lead to rising bond yields, compounded by increasing geopolitical tensions, noted the brokerage.
Domestically, although the economy is experiencing slow growth, there is optimism about continued progress because of planned stimulus measures.
With the approval of the fiscal 2024 and 2025 budgets, stimulus is expected to to flow into the economy in the final quarter, continuing into 2025, according to ASPS.
The government’s stimulus efforts will primarily target increased spending, private investment and household consumption, but these areas face risks related to excessive debt and potential downgrades to the country’s credit rating, noted the brokerage.
Political developments in Thailand are expected to escalate, putting downward pressure on the Stock Exchange of Thailand (SET) index.
ASPS predicts there is unlikely to be a resolution regarding the dissolution of the Pheu Thai Party amid ongoing petitions.
This situation may delay foreign capital inflows into the Thai stock market for the remainder of the year.
Moreover, ASPS forecasts the profits of listed companies for the third quarter will be below expectations. The initial earnings data from Bloomberg Consensus as of Oct 29, which represents 132 listed companies (accounting for 75% of market capitalisation), expect their profits will be around 220-230 billion baht, representing declines of 11% and 14.5% compared with the previous quarter and year, respectively.
The earnings yield gap (EYG) — the difference between the policy interest rate and the Thai stock market — is 3.8%, which is consistent with the historical average.
ASPS projects the earnings per share for the SET index to be 91.4 baht in 2024, rising slightly to 98.8 baht in 2025.
Assuming the policy rate remains at 2.25% and the EYG at 3.8%, the SET index target is 1,510 points for 2024 and 1,633 points for 2025, noted the brokerage.
ASPS said stocks projected to post net profit growth in the third quarter while maintaining low volatility include WHA Corporation (WHA), Plan B Media (PLANB), CP Axtra (CPAXT), Bangkok Dusit Medical Services (BDMS), SC Asset Corporation (SC) and Airports of Thailand (AOT).