Posted on 17 Mar 2009
The Securities Analysts Association has cut its economic growth forecast to -1.8%.
The SAA consensus forecast for the Stock Exchange of Thailand index is for a year-end target of 495 points, with the index moving between a range of 348 to 527 through the year. The SET index yesterday closed at 424.61 points, down 0.18, in trade worth 6.4 billion baht.
But analysts raised their corporate earnings estimates to 5% earnings per share (EPS) growth, up from a -4.9% estimated decline made at the end of 2008.
Sombat Narawutthichai, the secretary-general of the SAA, said local analysts were now more pessimistic about economic trends, with a consensus forecast for a contraction of 1.8% compared with a forecast of 0.7% growth made at the end of last year.
A full 61% of analysts polled by the SAA projected quarterly growth to decline for three straight quarters, with only one-third viewing a contraction in growth for just two straight quarters.
Some 65% of analysts viewed the first quarter as the worst in terms of growth, with a consensus forecast for a 4.8% contraction year-on-year. Another 29% of analysts believe the second quarter will be the worst point for the economy, with a forecast of a 5.2% contraction from the year before.
The National Economic and Social Development Board will report official first quarter economic data on May 25.
Analysts cut their year-end target for the SET index to 495 points in the latest survey from a previous consensus target of 547 points. The
Dr Sombat said the fourth quarter would likely mark the high for the market this year, on estimates that a turnaround in the global economy would come in 2010.
"Some 70% of analysts see the global economy recovering in 2010, with 17% seeing a rebound in the second half of this year. Another 4% expect a rebound to be delayed until 2011," he said.
Global fiscal and monetary policy easing, low interest rates and greater domestic political stability are among the supporting factors for the market this year.
But global and local economic uncertainties, declining exports and political uncertainties remained key risks.
"What the government needs to consider is the impact of the recession on the job market and unemployment," Dr Sombat said.
"Slowing exports and domestic economic weakness could result in greater problems for unemployment than originally feared."
The building and construction materials sector was projected to show the strongest growth at 24.7%, as companies rebound from the inventory losses posted in the fourth quarter of 2008.
The energy sector, the largest in the exchange, was projected to show 23.1% EPS growth, followed by the hotel sector at 11.9%. On the downside, shipping was expected to post a -51.4% decline in EPS due to the drop in global trade, followed by the petrochemical sector at -34.2%.
Dividends per share however are seen as falling this year from last year as companies build up their cash positions due to the uncertain economy, Dr Sombat said.
The banking sector was the only one seen by analysts as posting higher dividends per share this year, with a consensus forecast of 3.3%. All other sectors are expected to show declines, with shipping leading the market at -49.4%, followed by -37.4% for petrochemicals.
