Thailand's stock market is expected to benefit from a global manufacturing recovery, returning foreign capital and growth in artificial intelligence (AI) and data centre investments, says Bualuang Securities (BLS), with the benchmark index projected to top 1,700 points next year.
The brokerage expects foreign investment inflows into Thai equities to continue through the first half of 2027, potentially reaching 160-200 billion baht, as the global manufacturing cycle recovers and international investors gradually return to the Thai market, said head of equity research Piriyapon Kongvanich.
Historical data shows foreign fund flows typically remain positive for 10-12 months during an upcycle in global purchasing managers' indices. Roughly 75 billion baht has flowed into Thai equities so far in the current cycle, suggesting further inflows could emerge through the first half of next year, he said.
BLS set a Stock Exchange of Thailand (SET) index target of 1,710 points by mid-2027, based on projected earnings per share of 98 baht and a fair price-to-earnings ratio of 16.7-17.4 times. The downside level is estimated at around 1,550 points, assuming no escalation into full-scale war in the Middle East.
"The market outlook is supported by improving corporate earnings, with upgrades particularly among globally linked sectors such as energy, petrochemicals and electronics," said Mr Piriyapon, adding that earnings growth is expected to broaden into domestic sectors, such as banking, retail, transport and tourism.
Another potential catalyst is the global AI capital expenditure cycle, which could support Thai electronics exports and foreign direct investment. Data centre expansion is expected to increase electricity demand, particularly in the Eastern Economic Corridor (EEC), creating opportunities for power producers as the power development plan and direct power purchase agreement frameworks become clearer.
Tourism is expected to recover, with foreign arrivals projected to tally 33 million next year, while hospitals and hotels catering to foreign customers, particularly from the Middle East, are showing signs of recovery after reaching a low point in the second quarter.
BARBELL STRATEGY
For Thai equities, BLS recommends a barbell strategy to navigate a K-shaped economic recovery, combining structural growth stocks with defensive and recovery plays.
The strategy focuses on five themes: long-term structural growth linked to electricity demand in the EEC; defensive high-dividend stocks; domestic consumption and tourism recovery; event-driven trading opportunities; and energy stocks as an inflation and geopolitical hedge.
Chaiyaporn Nompitakcharoen, managing director of sales and trading business at BLS, said the AI investment cycle remains a major long-term opportunity. These cycles typically last 3-5 years, while major US technology companies are already converting AI investments into stronger cloud revenues.
BLS does not view AI stocks as a bubble, despite elevated valuations, as earnings growth continues to provide fundamental support. US technology companies also benefit from global customer bases and high margins, supporting relatively high valuations.
The brokerage recommends asset allocation of 75% equities, 20% bonds and 5% gold. Within equities, the largest allocation is to the US at 40%, followed by China technology and emerging markets at 10% each, while 5% each goes to the Thailand, India and Japan markets.
"The strong US weighting reflects robust corporate earnings and the early stage of the AI capex cycle," said Mr Chaiyaporn.
"By contrast, BLS allocates only 5% to Thai equities, citing limited index upside, high household debt and the uneven nature of the domestic recovery."
The allocation is designed to capture global innovation-led growth while retaining defensive income from Thai dividend stocks, providing a more balanced portfolio amid persistent inflation and geopolitical risks, he said.
