Transcription
Well, it's probably not just about playing around, like who benefits from opening Hormuz, but it's probably more like my view is that the theme today, how foreigners look at Thailand, and even the funds themselves, they probably aren't looking short-term anymore. That is, today there's an opportunity for Thailand to be able to gain in the long term. This, I believe, is a theme that, uh, foreigners are more interested in.
Foreign investors themselves are also excited about the Stock Exchange's Jump Plus project, you know, with Jump Plus. What is Jump Plus? Jump Plus is a project that tries to help unlock the value that might be trapped, you know, stuck in a rut, uh, to make it reveal itself. One of our neighboring countries is starting to falter right now, huh? Their stock market, oh wow, prices have dropped by almost 40%, you know, and a lot of money is flowing out. You know, uh, MSCI even came out to threaten that there might be a rating adjustment, hey, an adjustment of the tier down from Emerging Market to a frontier market or something like that. I think that could be an opportunity for us.
Even though we've seen an initial agreement, you know, between the United States and Iran regarding the end of the war in the Middle East, and there will be a signing of the agreement on June 19th, the risk hasn't, uh, completely disappeared, you know. It's still 50/50. As soon as the agreement is signed, the risk will decrease, but as long as it hasn't been signed, the risk will still remain, you know. And tonight there will be a Fed meeting, you know, the US central bank as well. Today, we'd like to invite you to talk with P' Tom, Khun Paiboon Narintarangkul, Chairman of the Federation of Thai Capital Market Organizations, about investment during this week. Uh, should we adjust our portfolio or not, or how does P' Tom view the second half of the year, huh? Regarding the investment landscape, which assets should we place, in what way, which are safe, which allow us to manage risk, and which are opportunities for investment, you know? Today, P' Tom is with us. P' Tom, hello!
Hello, Khun.
Ah, P' Tom, you've come at just the right time, you know, because on Monday, the United States and Iran are going to make peace, you know, signing an agreement to end the war this Friday. How much does P' Tom think the Thai stock market will benefit? Because it went up to 1,600 and then flowed down again. Has it really absorbed the news already for this news, for all Thais?
Well, it probably has absorbed some of it, you know, but I think it still benefits because, actually, Thailand is one country where, when such events happen, everyone views us as a country that likely has quite high risk because we are a country that imports quite a lot of energy from the Middle East. Uh, about half of our energy, you know, comes from the Middle East, you know, during the period before this war broke out. Um, so we were, um, branded, you know, as one of the countries that, um, would receive quite a lot of risk. Therefore, if it can truly de-escalate, you know, it should be good news for us, you know, because it means that both, uh, energy, you know, will be able to enter our country more conveniently, you know. Energy prices will also decrease because we are an importer, so when energy prices decrease, we already benefit. And especially in terms of tourism, we will also benefit, you know, because, uh, today we, uh, rely heavily on tourism, you know, and in the past, tourism has been quite affected in terms of tourist numbers. So today, I think stock prices haven't fully reflected it yet, you know. They've reflected it to a certain extent, but if it can truly de-escalate, then there should be, uh, upside remaining for the Thai stock market.
Hmm, yes. That is, if we look at, uh, last Monday, huh, when the Thai stock market index went up, oh wow, it went past 1,600 and then adjusted downwards. Do we still really have internal problems in our country, even though we see global stock markets rising a lot? That's because they have technology stocks, uh, AI stocks, many businesses that are modern trends. But we might still have household debt, low economic growth, and it hasn't fully recovered yet. How far can we go up, P', because we have our own specific problems?
Stock prices, you know, stock prices, they, they reflect the future, you know. Stock prices don't reflect the past. Everything you've mentioned, uh, is something everyone already knows well, you know. But of course, it hasn't been resolved yet, but it's well known that it's a problem for Thailand. And perhaps one good thing is that this government understands these problems well, you know. If you listen to Deputy Prime Minister Niti speak, or the Prime Minister himself speaks, they will, they will repeat these problems for us to hear, you know, that everyone knows well that these problems need to be solved. Therefore, it, it will probably still be a problem, you know, but at least, uh, those who govern the country, they understand it well. And the second point is that, in terms of, um, household debt, or many other things, they haven't increased, you know. That is, if we look at the proportion of household debt, if against GDP, you know, it has started to show a decrease, meaning at least it hasn't gotten worse, you know. But of course, it's still too high, so there will probably be, uh, further adjustments.
But if we actually look at our domestic index, um, nowadays, when looking at the index, you have to look at two figures, huh? The first is the SET Index, and the other is the SET Index with Delta stock excluded, you know. Because Delta stock, we have to admit, has risen almost 100% this year, you know, uh.
Oh.
Actually 100%, exactly 100%.
Yes, because, uh, at the end of last year, it was around 170 baht, now it's 330, so it has exactly doubled, you know. If we compare, 1 baht is equal to 1 index point, if we look at it simply, you know. So that means our index this year, which has risen by about 330 points, huh, from 1260 to today, it's around 1,590 points, so about 330, 30 points. Uh, allocate to Delta, which is the driving force, 180 points, you know. So that means the Thai stock market itself has actually only risen by 150 points, you know. Therefore, if we look at the adjustment upwards of the index, it has risen by about 15% instead of 26% as we see. No, it's only 12% instead of 26% as we see if we include Delta. So today, uh, it's considered that other stocks also benefited, you know, from the sentiment in the market, which has been steadily improving. And actually, earnings have also improved, you know. Our economy, actually, in the first quarter, also improved, you know, better than expected. But this is one thing I mentioned at the beginning, that I think the rise in stocks, you know,
It's not yet at its full potential, you know, because if we take Delta out, Thai stocks have only risen by about 10-12% only. It's not as high as some countries where they've gone up 50%, some 80%, some over 100%, you know. Oh.
Yes, oh, so it's not like stocks in many markets, P' Tom, like Korea, Japan, Taiwan. Oh, but those groups are similar to Thai stocks in that they have AI stocks that pulled the market up. Now, let me ask P' Tom a little bit: the Middle East war, which they will sign this Friday, Friday the 19th, if it's really signed, will it become a turning point for fund flow? Will capital move? And for the Thai stock market, what is our charm? If, let's say, it flows back into Asia more, from where it flowed in at the beginning of the year, what is our charm compared to other countries?
Yes, that is, if you ask if funds will flow in more, then we'll probably have to, uh, invite you to look back at the time before this war broke out, you know. Actually, this war started around late February, you know, and really began to have an effect in March. If you look at it, in the first two months of, um, this year, when this war hadn't happened yet, money actually started flowing in, you know. It flowed in since the end of last year, and then in the first two months of this year, it continued to flow in, you know, about 50 billion baht, you know. At that time, we thought, oh wow, it should be good. This year, we'll probably see money flowing in every month, you know.
But of course, it was interrupted by the war, you know. But if we follow it, the latest month, it has started to come back up, you know. May returned to positive again, so what does that mean? It means that actually, fund flow already chose to come into Thailand but was halted by the war situation. So if the war can truly stop, then I believe, you know, it will return to the original trend, which is that money that has made a lot of profit in foreign stock markets, um, will likely have, uh, an incentive to move into markets that haven't risen much yet. And Thailand itself, uh, if we don't just look at this year, you know, if we look at the past three years, as people know well, we have underperformed the global stock market by about 60%. So today, uh, everyone sees that the Thai stock market has an opportunity to recover well. We have a government that appears to have more stability, with a, uh, quite stable voice, you know, in terms of the major party, and there are many tech experts brought in to help, uh, implement business and economic policies. Um, the picture seems to be improving, you know, and there's clear talk about trying to attract FDI. That is, various stories, I think, can increase our charm. Thailand's charm today is, uh, how to make Thailand not stuck at 2% growth, uh, per year, like in the past. And actually, this problem is a problem that Deputy Prime Minister Niti himself always talks about, you know, that he's not happy, you know, to see the Thai economy grow by only 2%. So today, the Thai economy is at a point where the government is trying to create a New Growth Story, you know. There must be New Growth Engines, new industries must be created, new digital foundations must be laid so that new industries can come in and grow. Or if it's old industries, they are trying to modernize them more, use more technology, add more value to them, in order to move towards an economy that can grow more than 2%. This is the expectation, you know, of the stock market overall since the beginning of the year until today. Everyone still expects that these things are still possible. This will be one reason, you know, why money still has a chance to flow into our country because, in addition to seeing a recovery during this period, you know, uh, everyone hopes that the recovery will continue at a higher level, you know.
Uh-huh, yes. Regarding oil prices, P' Tom, do you think oil prices will decrease quickly? Because oil prices are another factor that is a cost and also a stone pressing down on the Thai economy, you know, because the Middle East war also made us bear a lot of costs.
Yes, actually, this time, this war, it's considered lucky, you know, that oil prices didn't surge so high that they stayed consistently around 100-something, uh, 100-something dollars, uh, you know. You'll see that every time it touches 100 dollars, or slightly breaks through, Mr. Trump has already come out and said it's almost successful, you know. Oil prices, once it repeats, I see the 100-dollar mark as a point that Mr. Trump might not like very much, not be very happy about, you know. Every time, he will come out whenever it touches 100 dollars, and then it will drop back to 90, to 80, you know. But the important thing is that it never drops below 80, you know. It will run around this level. Why is that? Because everyone knows well, huh, that some oil production infrastructure has been destroyed, you know. And, um, uh, oil transportation probably cannot be done immediately, you know. Once Hormuz is opened, it probably cannot be done immediately. Why? Because insurance costs are still quite high, I believe they are still high, you know, because, uh, there's still uncertainty about whether it's really open or not, you know. The second thing is whether there will be more mines somewhere else, you know. There's a risk that if a ship sails into a mine, it might explode, so, uh, in the very first period, there probably won't be oil that can flow back to the normal level of 20 million barrels per day, huh? Uh, today it's flowing out at only 7 million barrels, you know, 13 million barrels are missing. It might come back somewhat, you know, but it might not reach the full 20 million barrels per day that can come back. So oil prices, you know, will probably be higher than before the war. Before the war, it was around 60-something dollars, now it's 80-something dollars, you know. So it will probably stay around 80 dollars, you know. I'm looking at this for the next, uh, one or two months first, you know, to see if everything can truly calm down and if money and oil can truly flow out in the same quantity as before, or almost the same quantity. Oil prices might drop somewhat, but they will still be higher than before the war because it will take time to repair the worn-out parts, the damaged parts, so it might be 70-something dollars, 80-something dollars, something like that, you know. It's still not considered too high, and it's not too low either, so that, uh, it returns to the original level. It will probably take some more time.
Hmm, you might be relieved to some extent that if on the 19th, you see Mr. Trump say that if the agreement is signed, the Strait of Hormuz will open immediately, oil prices might drop. But as P' Tom said, it will probably remain at this level. So people are back to worrying about inflation and worrying about the US central bank meeting tonight. They're about to start their meeting. How does P' Tom see it, huh? What signal will the Fed send this time regarding maintaining interest rates, lowering interest rates, or raising interest rates, huh?
I think the inflation trend, if this situation can truly hold, you know, it should have a good effect on inflation in the sense that there's likely an opportunity for it to decrease. Even though oil prices might still be high, as long as everyone believes it's over, then it's just a matter of waiting for when it will return to its original production level. I think inflation probably won't surge much, you know. The most frightening inflation is about people's expectations, you know, that if they expect oil prices still have a chance to rise further, you know, it will make everything more expensive. That's where the bigger problem lies.
But if everything can truly calm down, everyone thinks that eventually oil prices will come down, and it won't put much pressure on inflation. Therefore, I still see that this time, the Fed definitely won't raise interest rates, you know, in this week's meeting. And within this year, I still believe that once the war has played out in this way, they probably won't raise interest rates at all, you know. And especially with the new Fed chairman, uh, who seems to have received a mandate from Mr. Trump from afar, you know, that he must take good care of it, huh? So I think he probably won't rush to raise interest rates, huh?
Which would be good for the market, uh, what they call global risk asset markets.
Probably, you know, that is, if the largest country, uh, stops raising interest rates, you know, which actually, they have reasons not to raise interest rates, you know, because actually, you know,
Uh, their interest rates are already at a high level, huh, compared to others. That is, today we see Europe might have raised them, but Europe lowered interest rates much more than America, down to 2%. So today, they have to raise them somewhat, but America is still stuck at 3.5-3.75%. 75% means it's not so low that there's no reason not to raise them, you know. Today, there are still reasons because inflation, even though it has exceeded their 2% target, it's probably temporary, you know. Because if everything can calm down, then it should come down from over 4%. Uh, at the same time, their core inflation hasn't exceeded 3% yet, huh? It's still around 2-something.
I think there are still reasons why,
Uh, the Fed might not need to rush to, uh, adjust its view on interest rates. And actually, if everything falls into place and the pressure really decreases a lot, then actually, next year, it might return to the process of lowering interest rates again, huh? Uh, no one can answer that today, but there's a chance it could be like that, just like before the war.
Oh, P' Tom, if oil prices also decrease, this is considered a cost, and interest rates don't rise, and there's a tendency for them to decrease next year, oh, this should have a good effect on risk assets and return to being profits for listed companies worldwide, right?
In the second half of the year, in the second half.
In the second half of the year, interest rates probably won't change, you know, but the fact that interest rates might not need to be raised as some people once expected, you know, that we might see US interest rates rise in, perhaps, the fourth quarter, then of course, it will have a better effect, you know, both in terms of business costs themselves, you know, and in terms of, uh, consumer purchasing power itself, you know. It should be, uh, better than if interest rates were to rise, you know. This will help the overall economy.
Hmm, now let me ask, what if they don't sign on June 19th, P' Tom? Hormuz still won't open as you mentioned. Will it be risky?
It's certainly risky, you know, because actually,
Actually, everything I've analyzed today,
is based on very high risk, you know, that it might not be correct if, uh, Mr. Donald Trump changes his mind, you know, or Iran changes its mind.
Or if Israel rises up and says no, they still want to continue attacking Lebanon, you know, that's off, huh? Because Iran says, of course, Israel must stop attacking Lebanon. But, but I understand that Israel might not, might not have been part of the agreement with Iran, you know, so I'm not sure, you know, how much Israel will listen to Mr. Trump. So this, it's still, everything can still change every second, just like we've seen in the past. So today, the risk is high, you know. What I analyzed is that if it turns out that everything is good, you know, there are no problems, you know, and Mr. Trump goes back to, uh, doing his midterm election campaign, you know. But don't forget, you know, that Mr. Trump, deep down, still wants to wage another trade war, huh? We haven't talked about this yet, but it's still, it's still there, you know. Therefore, uh, and Thailand is one of 16 countries he's investigating under Section 301, you know, whether our trade surplus is, uh, reasonable or not, you know. Uh, whether we're using our excess production capacity to export into the country or not.
And there are high-value goods coming from China, you know, being labeled as "Made in Thailand" and then exported, or whether we use forced labor, all sorts of things, you know. That is, Mr. Trump is trying to pick a fight, you know, with countries that have large surpluses, you know. So here, I think once the Hormuz conflict is over, there will still be battles to fight with Mr. Trump, you know. So I hope our Ministry of Commerce can, uh, fight back, you know.
Hmm, this doesn't even include where else he might start a conflict to seize territory, P' Tom.
Ah, yes, that's another geopolitical risk, uh, a geopolitical risk that,
no one can, uh, uh, answer for the next two years that Mr. Trump is still in office, you know. So we'll have to, uh, continue to monitor it closely, you know.
Hmm, yes. Now, when COVID happened, P' Tom found that there was a COVID-era investment theme that still persisted, and then, uh, after COVID ended, there was a reopening theme. Now that we're here, can we use the theme of opening Hormuz and the war ending? Does it affect whether we can invest using this?
I think if, uh, today, the fact that stock prices didn't drop much this time, they even adjusted upwards, uh, so opening doesn't mean that, oh, everything will return to being very good, you know. Because the impact, if we follow the unrest in many past rounds, it seems the capital market barely cared, you know, since
the round of, um, Russia-Ukraine, it cared for only a few days, you know, and then, and then it returned to normal, no longer interested. Um, Israel-Gaza, people were shocked for one or two days, then it was over. This time, people were shocked for about, I counted for Thailand, they were shocked for 5 days, huh? That is, they started firing on February 28th, you know.
In March, we also started, uh, started to be affected, you know, and it dropped, dropped about 10% to its lowest point of 1,300-something, uh, in 5 days, you know. It took 5 days to hit the bottom, then it bounced right back and never returned to 1,300-something again, you know. So, it's like it ended in 5 days, uh, and wasn't too disruptive, meaning it was monitored, you know, fluctuating daily, but it didn't, didn't have any very severe effects. So today, if a theme is really going to come in, if that situation calms down, uh, it probably won't just be about who benefits from opening Hormuz, you know, but it will probably be in the nature of what I think is the theme today, that foreigners look at Thailand, and even the funds themselves, they probably aren't looking short-term anymore. That is, today there's an opportunity for Thailand to be able to gain in the long term. This, I think, is a theme that, uh, foreigners are more interested in, you know. You'll see that today, in the initial period, it might seem like they came to seek refuge, you know, but after seeking refuge, Thailand, we, we have changes happening. Just now, I talked about the government's side trying to create new Growth Engines, trying to increase the potential of the Thai economy.
Uh, uh, at the same time, they are also trying to maintain discipline, you know, not to lose discipline, ah, and also, perhaps, borrow less by using, uh, equity instruments to, uh, drive the expansion of the economy, you know, through the use of infrastructure funds and various other things, you know, which the government hasn't explicitly stated. This is considered a good point, you know, that at least, uh, they will try to create new growth without incurring too much debt, you know. Uh, at the same time, foreign investors themselves are also excited about the Stock Exchange's Jump project, you know. What is Jump? Jump is a project that tries to help unlock the value that might be capped, you know, stuck in a rut, uh, to make it reveal itself, you know, through higher information disclosure, through encouraging various listed companies to think more deeply, you know, about how to generate higher returns for investors than before, in order to increase the value, uh, of the businesses. This has been successful in many countries, you know. That is, foreigners have made profits in Japan, made profits in Korea, you know. Similar projects that improve value, they see that Thailand is also starting to follow suit, you know, so they are starting to pay attention to this. Therefore, today, the capital inflow, I believe, is capital that is ready to wait for, um, the changing developments of Thailand, both in the context of the government itself dealing with the economy and the context of the stock market itself trying to deal with, uh, uh, stock value. And there's also the TISA project, you know, where the government is trying to provide, uh, tax incentives, you know, for investing in many stocks in the stock market for the general public, you know. Uh, they come in and receive tax benefits, similar to many, many things that have been successful in Japan and Korea, which have had similar successes, you know.
This, I think, is probably the expectation of investors who come to invest, that, oh, one year, two years, three years from now, there's an opportunity to get quite good returns from investing in the Thai stock market compared to the past.
Oh, P' Tom, does that mean this group is likely a group that invests with long-term expectations, meaning they are long-term investors, right?
I, I see it that way, you know, because today, of course, if investors start asking about Jump Plus, if they are interested in coming in, they probably can't expect short-term gains because Jump Plus takes time to, um, complete, huh? It's not something that can be done today or tomorrow, uh, or the government's economic structural changes, increasing potential, creating new Growth Engines, doing many things, these are all long-term matters, you know. And the good thing is, it's the first time Thailand has started talking about long-term issues that have a possibility of happening, you know, and then,
Uh, making it happen. But today,
The difficulty will probably be the part about having to make it happen, having to make it effective, or at least having to show some results to build continuous confidence, and money will keep flowing in, you know. Today, I think this is a more important point than short-term matters, more than opening, more than falling oil prices.
Yes, so the picture that's emerging now is that Thais, Thai investors, are going out to invest abroad, meaning buying foreign stocks, but foreigners are gradually coming back in to collect Thai stocks and are hoping for projects that will create quality long-term infrastructure. Is this roughly the picture now, huh?
The picture will be like, um, the government is trying to stimulate FDI, right? FDI means trying to bring foreign capital,
uh, business capital, you know, to expand businesses in our country, to build Data Centers in our country, to build, uh, perhaps new power plants in our country, to build many things in our country, in order to, um, make us, we, have higher growth potential, you know. They might come and do it, and at the same time, we ourselves must try to do things that are more long-term, you know, in order to, uh, do whatever it takes to make the Thai economy able to grow by 3%, 4% again, like it used to in the past. This is what, uh, the Real Sector side is doing. The Financial Sector, of course, also expects to see these things, you know, so they must come and invest in various businesses that are likely to benefit from, uh, increasing the potential of the Thai economy.
Ah, yes, but in the Thai stock market now, are we starting to see signs of investor groups who see us doing long-term projects yet, P' Tom?
They're probably waiting, you know, as I said, we were interrupted during, uh, this war, you know. Like at first, 5-6 billion came in, but that was probably just to park money first, you know. After that, we had, uh, a new government came in, you know, and there were policy announcements and various things, and we saw that, okay, there's continuity in doing these things, you know. It's a continuation from when it was in, in, uh, the previous government for about 4-5 months, you know, when Khun Anutin first came in, it seemed to be continuous on these matters, you know. There was team preparation, doing everything, going out for roadshows, trying to stimulate these things to happen. Now, the Stock Exchange hasn't stood still, you know. The Stock Exchange is trying to work with the government, uh, to, uh, make these things happen, you know. And perhaps these businesses that apply for BOI, the SET also tries to list them, something like that, you know. So today, it's an attempt to show that we are going to do these things, long-term. Um, the SEC itself is trying to increase the attractiveness of the Thai stock market, like it's working as a whole body, you know. Right now, it's trying to make,
to make the Thai stock market, it, it has a better environment. Ah, transparency, this has been done for a long time, for about 2-3 years now, you know. We see that we've cleaned up all these issues. Uh, the lingering problems, they've been largely dealt with, you know. The issues of, uh, lack of, uh, what they call, lack of clarity, you know, regarding HFT rules and regulations, and what about short selling, it seems like it's all been completed, you know. Today, it's at the point of looking forward, how to create new growth, how to create new supply, how to fix infrastructure, how to make, uh, investors able to invest more freely, more easily, something like that, you know.
Oh, so our home is clean now, right, P' Tom, ready to welcome guests? Well, it's much better than before, you know. Ah, today, of course, if you ask if it's completely free of problems, it's probably not true, you know, because every place has them, you know, if people try to take advantage in improper ways, you know. But we have to admit that today our rules and regulations are much stricter than before, you know. To, uh, do things the old way would be very difficult, you know. Like today, the rules regarding Transparency and Governance, we have raised them to a satisfactory level, you know. It might not be 100% complete and perfect yet, but there might not be much left to do. Today, you'll see that the side of, uh, policy makers, they are trying to look forward now, how to make the Thai stock market return to where it should be. Today, I, I think it's probably a good point, you know, coupled with, uh, one of our neighboring countries is starting to falter right now, huh? Their stock market, oh wow, prices have dropped by almost 40%, you know, and a lot of money is flowing out. You know, uh, MSCI even came out to threaten that there might be a rating adjustment, hey, an adjustment of the tier down from Emerging Market to a frontier market or something like that. I think that could be an opportunity for us, that when there are problems, when money flows out, this money that flows out has to go somewhere to rest, you know.
If we show that we don't use them, you know, we have, uh, I think a much better immunity than that, and today we are looking forward. We have finished dealing with our problems regarding governance and various other things that used to be problems in the past 2-3 years. This is also an opportunity for Thailand as well.
Yes, but in the case of Indonesia, where they have problems regarding, yes, capital outflow, and also using, uh, populist policies in a way that, oh wow, people are scared, this won't affect the entire region, right, P'? Meaning, ASEAN as a whole won't be affected, right? Indonesia's case is not related anymore.
Oh, not at all, sir. It's not like 1997 or 2540 (Buddhist calendar) back then, the Tom Yum Goong crisis, huh?
Huh, Tom Yum Goong, that is, back then, everyone didn't differentiate, you know. Foreigners knew very little about this region, you know, and then,
Yes.
Let's just say it was all the same basket, same problems, you know. Uh, now it's not like that. I think foreign investors are much smarter now, sometimes even smarter than us, you know. They know everything, who's doing what, where, and how. So, uh, no, sir. They already analyze it by country, you know. And rating agencies, everyone, you know, who analyzes things, they can differentiate everything now, you know, because each country has a different context, you know. Um, so, it, it might be considered a good thing or not, I'm not sure, you know, but we'll have to keep watching to see,
what happens, you know.
Hmm, so there might be money from where they used to invest in their markets coming to spread out into other markets, including Thailand, if we do things that catch their eye, right, P' Tom? It might be,
Yes, today I think it's, it's time to compete for foreign capital, you know. The capital that they might have gained a lot of profit from tech stocks and other stocks, you know.
That is, when looking at growth stocks, tech stocks, and various other stocks, they probably don't look in Southeast Asia because we don't have them here, you know. Our region tends to have value stocks, uh,
uh, more traditional stocks. Of course, I think investing cannot be done in just one way, you know. There must be portfolio diversification. Uh, in the past, they probably didn't abandon all tech, but they would choose to invest in America, in North Asia, you know, in North Asia, like Japan, uh, Korea, Taiwan, these places, you know. But now, they have to look in this region, Southeast Asia. Previously, they might have thought, oh wow, Vietnam is interesting, Indonesia is interesting, but today, they're starting to be unsure about Indonesia's long-term prospects, starting to be somewhat unsure about Vietnam's long-term prospects. Thailand seems to, um, be showing interesting developments, you know. Uh, this is our selling point, but we have to make it happen, meaning we must not trip ourselves up. Now is our moment, and we must try to capitalize on this moment and make the most of it.
Hmm, Mr. Pithom analyzed that actually, people are starting to give less weight to geopolitical factors, especially what happened with Russia and Ukraine, and now even in the Middle East, it's less. Why is that, P' Tom? Why are people giving it less weight? Well, today, uh, I believe the global economy's immunity has increased a lot, you know. For example, if we look at this round, the war closing Hormuz and all, but America announced its economic figures, many countries announced their economic figures, and they are still good, you know. It's not at the point where, oh wow, it's negative, a reset. No one talks about recession. No one talks about severe slowdown. No one talks about, um, oh wow, the economy won't survive. Uh, the World Bank, just last week, adjusted its global economic forecast down by only 0.1%, you know, from an initial view of 2.6% to 2.5%, 5%, you know. Even though there hasn't been a signing of the agreement yet, huh? Something like that. Or in the past, it was like there were very small adjustments, you know. Like the IMF two months ago also adjusted its own by 0.2%, huh, from an initial view of 3.3% to 3.1%, 1% of global GDP growth. That is, it's still, I believe that today, the global economy is quite strong enough.
And it has quite good immunity to absorb the various crises, uh, that, that have occurred, you know. It might be because it's a benefit of the new round of investment in AI and various other things. So there's capital from accumulated business profits that is still being injected into the economy through AI investment, you know. For example, if America invests in AI, they have to buy things from our region, right? Buy chips, buy these kinds of things. We can export well, so it makes everything spread out. It also reduces, reduces, reduces the force, um, or the risk from various crises that occur, you know. But if this round of investment is over, then we'll have to see, you know, whether the global economy will still have anything that, uh, can counteract these risks or not, you know.
P' Tom, one issue that people, uh, are monitoring is the AI bubble. They say, oh, earnings are still good, so it might not happen during this period. From P' Tom's perspective, is this AI bubble fully inflated yet? Is it ready to burst?
I think no one can answer that, you know. No one can answer because no one is 100% confident to truly answer whether the productivity that will arise from AI, oh wow, will be as good as we dreamed. And today, of course, it's a period of investment, you know. Everyone is competing to invest. Everyone sees that AI is definitely good, but to quantify anything or, ah, to assess it in numbers is not easy, you know, to say, okay, invest 100 baht and you'll definitely get 10 baht back per year, so in 10 years you'll get your capital back. It can't be answered, you know. So today, I can't answer your question whether it's an overinvestment. Uh, of course, if you've invested, and then the productivity, once the investment is complete, and then it's time to harvest from it, if the productivity doesn't actually increase much, you know, if it can't really help reduce production costs or anything like that, as was once expected, then this would be considered too much of a bubble. Or some people who want to provide AI services but can't charge high service fees, uh, like the public won't pay for subscription fees and various other things, then it's considered too expensive. So today, I think it's difficult to answer, you know, but today is still a period of investment. It will probably take another 5 years for us to know, once they actually start using it, whether the productivity that arises is as high as expected, you know.
Oh, and actually, up until now, is it still worth investing, P' Tom? The reason I ask is because they say that since Thailand, we don't have AI stocks, there are only one or two related ones. So if, let's say, they are disappointed with AI stocks in foreign markets, they might have money to come back and invest in traditional economies like ours, huh, which are tangible and used every day. Is it really still worth investing in AI stocks now, P'?
I think traditional economies are also economies that benefit from AI. That is, today there are two groups, you know. The group is that everyone benefits from AI, you know. All traditional businesses, whether you're in the airline business, securities business, whatever business, we use AI, right, huh? Like me, I use AI, and I save on some personnel, you know. Instead of having to hire people to sit and set up things, I don't have to hire them anymore, you know. It can be pulled and used immediately, something like that. I think this is the group that benefits. So, on the investment side, of course, they are the ones who create AI for others to use, you know.
They naturally want to hope that they can sell it, you know. For us users, it depends on how much we will buy it from them, you know. Here, I think, uh, today, everyone benefits from AI, huh? From the AI that has emerged, it depends on how much traditional companies will adapt and use AI to help their businesses. I think the next stage will probably be to analyze it this way, you know. Okay, they've made a lot of profit from AI chip manufacturers. As you'll see, in the AI ecosystem itself, it's gradually moving down, huh, to see who it will go with, huh? Um, at first, it was chip manufacturers, hardware companies, you know. Now, software will come in by itself, you know. We're starting to see SpaceX coming in, you know. And soon there will probably be Anthropic, Open AI, you know. These actual AI service providers are starting to come in instead of just chips, huh? But of course, the last ones to benefit from AI are the various businesses that take mature AI and use it to increase productivity, to reduce, uh, business operating costs, to increase their own profits. Therefore, I think, in any case, um, traditional businesses are still interesting, you know. It's not that they're not interesting at all, you know.
But will this trend continue until next year, P' Tom? In P' Thong's circle, AI, I think the AI investment trend can continue indefinitely, you know. I think it's not over yet. If we look at the forecasts of, uh, various consulting firms that see investment in Data Centers still needing to go a long way, you know, because a lot of computing power is still needed, you know, to make AI perfect, you know. And today, investment is still considered incomplete, you know. They're looking until, uh, the year, that is, 2030, huh, that a lot more investment in Data Centers is needed before everything, uh, reaches a level where it can be used for commercial results in a serious way, you know. Um, I think it can still go a long way, you know. Investment in AI still needs to go a long way.
Hmm, but between now and 2030, these 5 years, will there be periods of adjustment? And what can we observe, P' Tom, huh? What can we observe to see if it will reach an adjustment? Can their valuation be achieved or not?
It probably depends on some stocks. If they've risen a lot, some stocks that have underlying profits might be easier to analyze, you know. But some stocks, like SpaceX, are a bit difficult to analyze, you know. But SpaceX doesn't do all AI, you know, but they have a part that does their X AI. This is a bit difficult, you know, because they don't have profits, so you have to look at, you'll probably have to use revenue to see if it's coming in yet, you know. Or sometimes if revenue isn't coming in yet, you have to look at potential. So, we have to admit that valuation is not easy, you know, which is why some people think it's a bubble. Some people who believe they can value it say it's not, because they think the potential is very good. Uh, we'll probably have to wait for time to prove it. But today, I think most investors still choose to invest in the ecosystem of businesses that have profits first, huh? Like Nvidia, like, uh, BRC, or whoever, who are already doing business and already have profits, and they do it, that's what they invest in in the early phases. But from now on, I think they'll probably have to start investing because once those stock prices have risen a lot, they'll have to go and find the next ones to invest in, such as those that might not have profits yet, but this is measured by revenue, when will it come in, something like that, you know. So I think it can still go further, you know, but we also have to, have to be very cautious. This will also be an opportunity for the Thai stock market, you know. When AI stocks start to become harder to invest in because they reach a point where you have to invest in stocks without profits, the risk starts to become high. It won't be like investing in Nvidia, whose profits have been growing steadily, you know. In 10 years, Nvidia's profits grew by 10,000%, you know, because it grew from a very low base. Their stock also rose by over 10,000%, huh? Here, it's still, it's still something that's not too difficult, you know. But if you have to invest in stocks like SpaceX, this is, oh wow, difficult. From now on, I believe there will be many AI companies without profits entering the market, so it will probably become increasingly difficult. There will probably need to be diversification of risk into, uh, traditional companies that will be users of AI, not direct investors, you know, uh, not direct innovators, but investing to utilize it, you know.
And as for traditional businesses like ours, which have a story about changing the country's potential, I think they are also interesting. I think today, Thailand is at a point where it can, uh, attract capital as a diversification of funds coming in. But we also have to prepare ourselves, make ourselves, make them confident, you know, both in terms of Governance and our Growth Outlook, our Growth Story.
Hmm, yes. Now, P' Tom, how do you see it? 1,600 has already been passed, huh? Station 1,600 has been passed. This year, in the second half, what level do you think we'll see, P' Tom?
That is, today, 1,600 points, if we take Delta out, you know, uh, today the index is around 1,400 points, you know. That is, Delta contributed almost 200 points, what I mentioned at the beginning of the program, 180 points.
Therefore, today, um, the index, if not including Delta, is only about 1,400 points, having risen only 12% from the beginning of the year, you know. So it's not considered to have risen much. Today, if you ask me about the index, today I think it will be difficult to answer because the index depends on whether you, Khun Nao, want me to include or not include Delta, and whether Delta will rise another 100% or fall 50%, no one can answer that at all.
Because today, Delta's valuation, you know, is very volatile, you know.
Sometimes it trades at 50 times, sometimes at 100 times, sometimes at 120 times PE, you know. It, it's,
It's a stock that's quite volatile, uh, and when included, it becomes unanswerable. But if you ask me about the Thai stock market, let's say today I don't remember how many stocks there are, let's say 850 stocks, then, uh, I would answer that the other 849 stocks, not including our largest one, probably still have upside, you know, at least 10%. Here, this will be the upside for the Thai stock market, uh, but the last one, no, the first one, not the last one, the very first one, oh wow, it depends. If it can stay put here, then, uh, the Thai stock market already has a chance to break through 1,600,
you know, but,
if it seems to come down, you know, but other stocks rise, it depends on how much it will come down. But today I will say that all other stocks are trading around 1,400 points, you know. Therefore, uh, 1,400 points has a chance to rise, uh, uh, quite a bit more.
Because today, besides 1,400 points, if we look at the PE ratio, huh, today people might think the Thai market's PE ratio is quite high. Uh, today, if we look at the forward PE, you know, our future PE is around 16 times, which is quite high. But don't, don't forget, you know, I just said that large stocks sometimes trade at 100 times. Uh, if you pull that one stock out, you know, today the Thai stock market's PE is only 12 times. I asked analysts to try pulling it out, 12-something times.
12 times is considered very cheap, you know, because, uh, since post-COVID, uh, if we don't count Delta, our average PE is around 14 times. Now it's around 12 times. So I said that the chance for the stock market to rise 10% is very high, just by letting the PE rise back to 13-14 times, not including it, uh, you get 10%, you know. Plus, this year will be a year where listed companies' profits, their profits are starting to improve, you know. They've been improving since last year.
Q1 is still good, and it's believed that this year will be a year where,
uh, listed companies' profits will continue to grow. This will help push stock prices higher in another way.
Hmm, oh wow, P' Tom, but for the rest, you know, because actually people only play a few stocks, but for the rest that P' Tom mentioned, uh, who will be the vanguard to lead the charge first? They say that if there's no general, then the troops won't dare to charge either, you know. Like, funds have to buy, if they don't buy, then it won't be, then, uh, what they call, the returns won't beat the market, huh? Where will the money come from?
Oh, no, I think if, if the story comes, the money will already be there. That is, today, liquidity is not a problem, you know. That is, if there's a period when, when,
when the story comes, you know, and confidence comes, like at the beginning of the year, it was 100 billion, and we saw it already. That is, whenever it comes, I think, um, liquidity is not a problem. Today, the whole world doesn't have a liquidity problem. The whole world has a problem of where to invest, you know. Um, where to move from and to where, you know. So today, I think, um, it's not a problem at all, you know. And actually, we have many interesting stocks, not just the, um, Delta stock alone, you know. There are many others. Bank stocks right now, they pay good dividends. Communication stocks, and other stocks, their profits are good, their dividends are good. Um, various commercial stocks, various retail stocks, they also benefit from, uh, various consumer stimulus policies that have occurred, you know, which is good. I think today, actually, there are quite a lot of options, you know. And if, if the government invests in a new round, or if FDI comes in, many stocks will likely benefit, you know. Stocks like, uh, uh, industrial estates, many kinds of stocks will gradually start to benefit. During this period, I think the distribution of growth should, should be quite good, improving, you know. But all of this, huh, must be based on the assumption that the government remains stable like this, you know, and can continuously push out various policies, you know.
Uh-huh, ah, let me ask P' Thom, P' Thom, what themes are there for the second half of the year that will extend long-term until 2570 (2027 AD), huh? For the Thai stock market, what themes are interesting? I think the theme is that today, most of our Thai stocks are already related to domestic industries, uh. If we look at it simply and briefly, if this war can end, then I think tourism is interesting. Tourism is already an important engine for us, and in the past, it has been continuously affected a lot, making it not very,
Um, uh, able to go at full capacity, you know, whether it's about China's uncertainty, you know, fear of being kidnapped. Uh, just as it started to look like it was getting better, this war came, and, uh, all the Arab people couldn't come, couldn't travel, or chose not to come, something like that, you know. It, it faced quite a lot. If everything, assuming, assuming it calms down, then I think once it returns, tourism stocks will benefit. Many of our hospital stocks will also benefit, you know, because our hospitals also do a lot of business with foreigners, foreign patients, you know. This, I think, is already our strength. And our wellness business, like Tourism Wellness, it's a business where we already have, uh, competitive ability, you know. So here, I think, uh, it will, it will benefit immediately, you know, from what happens. Uh, or it's the adjustment of the, uh, uh, potential of our country, I think, uh, many will benefit, you know, whether it's about communications. Communications will benefit a lot, you know, because from now on, the trend of AI coming, the trend of using more digital, using more, you know,
Yes.
You, we must have all communications, you know. We must use all networks, otherwise it can't connect. Data Centers, once set up, can't do anything, you know, if there's no telecom to link out. Today, I think communication stocks are very interesting stocks in the long term. Uh, we don't, we don't have many tech stocks, but communication stocks are also considered to benefit indirectly as well, you know.
Oh, now,
And there are quite a few, huh, huh, that we need to go and dig into, you know.
Hmm, yes, P' Tom, it seems that DRs, which are foreign stocks, are trading very actively, huh? Ours might only be active for Delta. Yes, that is, Thais are starting to diversify risk away from Thai stocks, which is considered a good thing, you know. Even though I said Thai stocks have a good story, still, our portfolio management will always need diversification, you know. You shouldn't buy in just one place, because what I said at the beginning of the program is that today's analysis, no matter how good you are, it, it has a risk of being wrong because today everything moves quickly, and sometimes it's a decision of just one person that can change everything. Today, we have to, have to be quite careful. Diversification is considered a good thing. DRs, of course, today everyone is familiar with them because they are easy to trade, they trade like ordinary Thai stocks.
Yes.
It's just that we can also create, uh, exposure to foreign stocks.
Hmm, hmm, yes, but it will become that, ah, stocks that come to be listed in Thailand, actually, people are, simply put, quite stuck with them, those IPOs before. And now, facing this situation, it will make companies that want to list IPOs, P' Tom, are you worried, huh, that there will be fewer?
Thai IPOs or whom, you know?
Thai, P', Thai IPOs.
Oh, Thai stocks, huh?
Yes.
Oh, okay, Thai stocks, I,
People are all favoring foreign stocks.
Yes, it's considered a good thing, huh, in the sense that we will have to select good stocks to come in, you know. And the second point is that the valuation,
uh, prices must be made, uh, more realistic, you know, more reasonable, you know. Uh, here, I think it's a market development where the more investors are aware of these things, the more accurate price discovery will be, you know. So I think that those IPOs that don't perform, ultimately it's probably about the price discovery process not being done very correctly, huh, not settling. Uh, if it settles, I think it will, it will be according to the true demand and supply that occurs. But all of this, we will also have to select quality companies to come in, you know. So this is a duty that the entire organization must do together, to find good companies to come in.
Hmm, P' Tom, do you have anything you'd like to say to investors? During this period, they might feel confused, you know, not knowing how to adjust their portfolios in such a volatile market. Gold, which was supposed to, now it's become quiet. Investing in AI stocks, they're afraid their portfolios will crash.
Do you have any advice for people during this period?
Yes, it will probably have to be diversification, you know. Um, we don't know what, uh, will be the best, you know. But today, I think investing in just one type of thing probably won't work anymore, you know, because the chance of, uh, us making a mistake is high, you know. So today, we have to diversify risk. If you ask if there are AI stocks, there should be, you know, because, uh,
It also still has opportunity to make profit, you know, but we might have to select stocks that might still have, um, appropriate value, you know. Probably have to look into the matter of having to pay attention to things like valuation and must have discipline, you know. And don't, don't play according to the market, you know. And also must have discipline in our own analysis, you know. But AI stocks, I believe, must also exist, you know, but might not go buy the ones whose prices have gone up very high. There are AI systems, there are very many, you know. And there are still some that have not performed much.
Um, but foreign stocks, I think the proportion that used to exist might have to decrease somewhat, you know, because their prices have gone up a lot, you know. Uh, Thai stocks, you know, the proportion that used to exist, I have, if possible, adjust it a bit higher, you know, because I think Thai stocks have an opportunity to come back, uh, out-perform the global stock market in the next 12 months from the reasons I mentioned, you know. Um, therefore, uh, anyway, one should increase the weight of Thai stocks and hold them, but should not put everything into Thai stocks, you know, because today there are still risks as well, you know. These instruments must still exist, you know, but maybe not in a very high proportion.
Gold should also exist, you know. Today, gold at 4,200 dollars, we view that it should be the lowest point this round, you know. Because why, you know? Because if the war really ends, then the dollar returns to a weakening direction like before the war. Um, and interest rates, not bond yields, might start to stabilize and decrease, not adjust higher like during the war. It will make gold more interesting like before the war, you know. Because long-term, I also believe that the long-term is still a period of the dollar's direction that must weaken, you know, because, uh, today America does not have very strong fundamentals in the long-term. And their debt levels and everything are very high, you know. Um, and like before the war, you know, the dollar has been weakening all along, you know. And it is believed that it will return to the trend of continuous weakening again, you know. It will make gold better.
>> Hmm, everything that P' Tom said, and it is an opportunity for investment, it will be tied to the condition of June 19th, this Friday. Must see, if signed and everything is smooth, it will be as P' Tom analyzed. But if it's not, meaning not signed, and they start shooting again, then this is purely risk that will drag on, you know.
And also must rely on a pro like P' Tom here to give us advice, you know, because he has been through every crisis and has been through every opportunity. Therefore, his perspective will make the picture connect and see the picture more clearly, you know.
P' Tom, today, thank you very much, you know, for coming to join the discussion with Wachana, you know. Thank you. Hello, P'.
>> Thank you, Khun Na. Hello.
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