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The Stock Exchange of Thailand underperformed again in November. At the beginning of the month, big-cap Delta Electronics helped push the SET Index up beyond 1,300 points. In the second week, the longer-than-expected US government shutdown was a drag on sentiment globally and locally. DELTA and commerce stocks plunged, bringing the SET down almost 6%.

Thailand’s third-quarter GDP growth of just 1.2% year-on-year, well below market forecasts of 1.6%, kept the SET on the back foot in the second half of the month. A sell-off of US tech stocks amid concerns about overhyped AI shares also gave investors pause. The index closed the month at 1,256.69 points, down 4% from October, with average daily turnover of only 33.8 billion baht, down 13%.

Some events in December are expected to be slightly negative for Thai shares. However, once DELTA is factored out, the valuation of the SET is now similar to Covid-19 levels, so we believe it could be an attractive point for investment.

The first key event in December was the US Federal Reserve meeting this week. As expected, it cut its policy rate by 25 basis points, to a target range of 3.5% to 3.75%. However, the "dot plot" projection of where Fed members think interest rates will go has changed, with only one reduction seen in 2026. The broader market consensus is that two cuts are still possible.

US economic conditions remain strong, and the Fed has revised up its GDP growth forecast to 2.3% in 2026, from 1.8% earlier, and to 2.0% in 2027, from 1.6%. This indicates that the Fed could have a hard time lowering rates, as inflation is not expected to fall to its target at 2% until 2027.

The second major event weighing on the market is the war with Cambodia. The conflict this time around seems to be more violent and could be prolonged, with a larger number of people evacuated from high-risk areas in border provinces. We have to expect that Thai trade with Cambodia may not be coming back soon, and many companies are considering moves to find new markets.

DECEMBER PICKS

However, in the second half of December, we believe the tax-saving season will be a strong catalyst for the market, as investors focus on stocks that are the targets of investment funds. As well, domestic consumption should be at its peak ahead of the New Year holiday. Our picks for December are Advanced Info Service (ADVANC), CP All (CPALL), Siam City Cement (SCCC) and Thai Asphalt (TASCO), as they are targets for Thai ESG funds and also offer good dividends.

ADVANC performed slightly better than market expectations in the third quarter. Its 12-billion-baht net profit increased 10% quarter-on-quarter and 37% year-on-year. Growth came mainly from the mobile business, and management believes this will continue into next year. Users of home fibre services continue to grow, and the company also has high hopes for AI and data centres to serve corporate clients and demand from cloud services. We believe ADVANC will be one of the target stocks for TESG funds.

The share price of CPALL has come down recently as it reported a 3% decline quarter-on-quarter in net profit. However, we believe the high tourism season will improve the retailer’s earnings in the fourth quarter. And while the company’s 7-Eleven stores are not eligible for the government’s co-payment scheme, it should receive indirect benefits from increased sales at its Big C and MAKRO outlets. As well, when people have more money left in their pockets, there is a chance they will spend more in 7-Eleven. CPALL has 126 branches that could be affected by the border conflict, but all of them are run by franchisees so the impact will be minimal, given the branch total of 15,764. We believe CPALL is also a TESG fund target.

SCCC is expected to see its profit continue to grow in the fourth quarter. Domestic cement prices remain strong, and we could expect demand to rise further from demand for post-flood renovations. We also expect demand from Vietnam, Sri Lanka and Cambodia will grow next year as these countries should continue to upgrade their infrastructure. We target profit growth of 7% next year. However, the key investment appeal for SCCC is its dividend yield. We expect it to provide a stable yield of 7.8% per year for the next two years.

TASCO, meanwhile, will benefit from road repairs after the flooding season nationwide. We expect demand for asphalt will be high from the fourth quarter through the first quarter of 2026, with an estimated 47 billion baht in government spending to improve roads in provincial areas. Also, we believe the new government will push for more infrastructure projects once it takes office after the election. This will increase demand for asphalt as well. TASCO’s dividend yield is also high at 6.5% per year.