MAYBANK Securities remains defensive on Thai equities though it acknowledges that the country’s broad-based recovery – as seen in its goods exports performance which turned positive in October – was a “welcome respite” from 10 months of contraction.

Although it noted that Thailand’s corporate earnings were forecast to grow in 2024, the research house considers the overall three-month earnings revision “relatively high” at -6 per cent, versus Asean’s -0.5 per cent.

It also highlighted weak tourism data, potentially low fiscal multiplier effects from the country’s digital wallet scheme, and twin deficits for Thailand’s economy as key supporting factors to the research house’s view that market sentiment “will continue to stay tepid”, even as the country recently formed a new government in September.

Noting that MSCI Thailand was the second-worst Asean performer in US dollar terms after Vietnam, the research house said it believes Thai investors remain risk-off given the outperformance of defensive investment styles. 

“We prefer to continue overweighting defensive or value companies with low price-to-book, low gearing, and high free cash yield – and to rebalance our Thailand model portfolios around commerce, telcos and energy sectors,” said its analysts in a Dec 22 report.

Home improvement retailer Home Product Center, real estate investment trust CPN Retail Growth Leasehold Reit, and pharmaceutical company Mega Lifesciences count among Maybank’s top picks.

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The research house also said it sees upside in the medium term for certain growth companies such as communications conglomerate True Corporation, oil and petroleum giant PTT Exploration and Production, and airline group Asia Aviation.

Maybank added that it believes a “contrarian strategy is apt for this cycle” though it is neutral on growth companies.

“A sustained soft-landing scenario in the US and bottoming of China’s economy are crucial dependencies to support a thematic pivot for Thailand.”