Tourism stocks vulnerable if Move Forward not in new govt: Aira Securities
Aira Securities Plc said investors should watch the Pheu Thai Party closely as it holds talks to form the new government, warning that changes in the political landscape could significantly impact the tourism sector.
It also suggests monitoring the parliamentary vote for the new prime minister, due to take place on Thursday (July 27).
The domestic political situation remains a crucial factor for the market, according to the latest Aira Securities report. The market is expected to respond positively to government formation by any party, as this has been delayed longer than expected and has led to increased political uncertainty and potential disruptions from protests. This could affect the tourism sector, which is still a significant driver of Thailand's economic recovery this year. Moreover, foreign investors might hold back investments to reevaluate the situation if uncertainty continues, Aira said.
Also, the slower-than-expected recovery of China's economy could impact outbound travel, especially from China to Asean countries including Thailand, where Chinese tourists made up the largest foreign market before the pandemic. This could lead to a fall in the projected number of Chinese tourists, impacting tourism-hotel stocks (AOT, AAV, BA, CPN, MINT, ERW, and CENTEL).
On the other hand, major banks' financial results performed better than market expectations thanks to an increase in the net interest margin resulting from interest rate adjustments on loans and deposits twice in April and June. This positive performance is seen as a driving factor for banking stocks in the mid-term. However, some short-term investors might opt to "sell on fact".
Aira noted that KBANK's latest financial results were slightly better than expected, but said the accelerating trend of non-performing loans due to continuous debt restructuring may cause an overhang effect on KBANK's stock price.
