The Thai stock market continued to head north during the past week, with the benchmark SET index testing 1,640 points on persistent inflows. Better than expected earnings bolstered sentiment on global bourses as the recovery mode turned towards a broadening market.Throughout the week, market-dominant stocks shifted from banks and blue chips to energy and petrochemicals, as well as stocks with earnings upgrade potential. Domestic factors including progress on direct power purchases, data centre investment and energy measures continued to be medium-term drivers.
Middle East uncertainty continued to weigh on sentiment, but the impact tends to be limited as investors emphasise fundamental factors and earnings more.
We expect the SET index to move in a range of 1,600 to 1,650 points in the coming week and remain on a general upward trend. However, we are starting to see limited upside after the recent rally that largely priced in positive factors.
We recommend investors shift strategically from chasing run-up stocks to take profits from market outperformers and rotate to "second-tier" plays or laggards.
Among factors to watch next week are the earnings of domestic and global firms, developments in the Middle East that will affect energy price movements, and US trade policies. At home, investors should monitor the impact from recently announced energy measures and updates on data centre investment, which remain medium-term drivers for power and industrial estate shares.
