Dichotomy on the Thai Stock Exchange -will be changing.

Dichotomy on the Thai Stock Exchange should be changing.

As I foresaw some time ago (post calling the Covit mkt. bottom), the Thai SET remains in a prolonged broad bear market. Where a very few large cap stocks keep being dominant, while most all else is shunned.

As a result the so called “yield gap” remains for some time at record distorted levels.  Meaning: Thai bank saving interest rates bring at best 0.5%, while various high quality value/growth stocks yield 6-7% in yearly tax favored dividends -and trading at p/e’s of 11-15.  

This, to any seasoned rational investor, is an astonishing mkt. distortion, never seen before.  Further, these select big cap’s, while trade dominating, dividend yield barely 1-2% -or less with their p/e’s at 30 to 70!.   Brief, 3-6 times higher p/e valuations -while generating ¼ -1/6 in annual dividend yields!

But I think things are starting to change due to:  

1) A just recent fall-out in the US on high-tech dominance. This enhanced for all the (just recent) news out of China (DeepSeek).  

2) All Thai 4Q. earning reports to be released by mid-February, along with their dividend announcements. This should shake even dominant speculators to re-assess.  

3) Not least the fall out just recently of so prominant DELTA (135) the notorious tech big cap here which regularly is the most active traded stock on the SET. DELTA dropped in recent months -and most lately -from near 180 to currently 136 Baht, yet at this much lower level still commands a p/e of 78 -with a stated yield of only 0.33%!

While a stock market can remain distorted for longer than we think, and this has been ongoing for over 3 years.  My view/call is that by next month some rationality will start to set in, due to the twin factors of, now emerging overall macro value rational reassessment in place while at the same time record dividend yields in secondary Thai value stocks, i.e the yield gap being at record levels for very long.  If so, a fairly substantial re-valuation in select high quality value stocks with substantial dividend yields should be in the making. I predict.