逆转财富：海峡谈话

Disclosures & Disclaimer This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it. MCI (P) 094/06/2016 MCI (P) 085/06/2016 MCI (P) 126/02/2017 Issuer of report: The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch View HSBC Global Research at: https://www.research.hsbc.com   We are neutral on Thailand. The market outperformed last year, but has been a laggard so far this year  A modest macro outlook and expensive valuations are mitigated by low rates and yield support  Banks are our preferred sector. We think their relative outperformance can continue Reversal of fortune Last year was Thailand’s year. The heady performance of Thai equities made the land of smiles the best performing market not only in ASEAN, but in Asia, in 2016. This year, by contrast, has been one to forget for Thai equities so far, with the market turning from leader to laggard as a hangover appears to have set in. We see four possible reasons for this underperformance:  Lacklustre economic growth. GDP growth of 3% is the lowest in ASEAN, save for Singapore. Growing protectionism doesn’t bode well for exports.  Subdued domestic drivers and political uncertainty. Concerns remain over household income growth and debt, while guarded consumer and business confidence weighs on prospects.  Valuations are expensive. The market is trading at its historical peak valuation of 14x PE.  Weak earnings momentum. Its EPS growth has slowed sharply from a region-leading level in 2016 to slightly lower than the ASEAN average. Its earnings revision ratio (ERR) is ticking down, even as the ERR for ASEAN is trending up. We are neutral on Thailand The headwinds cited above (modest economic growth, political uncertainty, expensive valuations) are partly mitigated by the low rate environment and yield support. This may explain why global funds active weights in Thailand are largely unchanged from three months ago. We are neutral on Thailand from a regional perspective. In Thailand, we like the banking sector the most. Investors seem to concur, judging by the bank stocks’ year-to-date performance. We think this outperformance can continue, given the more favourable earnings growth outlook of the banking sector (see Thai banks: ROA can return to previous highs, 15 March 2017). Our preferred play is Krung Thai Bank (KTB TB, Buy, THB20.40, TP THB26.20), which is likely to be the biggest beneficiary of peaking NPLs and infrastructure projects in the sector. 28 March 2017 Ismael Pili* Head of ASEAN and South Asia Equity Research The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch ismael.pili@hsbc.com.sg +65 6658 0606 Herald van der Linde* Head of Equity Strategy, Asia Pacific The Hongkong and Shanghai Banking Corporation Limited heraldvanderlinde@hsbc.com.hk +852 2996 6575 Jayant Parasramka* Associate Bangalore *Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations. Reversal of fortune EQUITY STRATEGY ASEAN Strait Talk  EQUITY STRATEGY ● ASEAN 28 March 2017 2 Reversal of fortune Last year was Thailand’s year, as the heady performance of Thai equities made the land of smiles the best performing market not only in ASEAN, but in Asia. This year the market appears to be suffering from a hangover, with its performance lagging the rest of the region YTD. Chart 1: ASEAN local indices performance in 2016 (local currency terms, %) Chart 2: ASEAN local indices YTD performance (local currency terms, %) Source: Thomson Reuters Datastream, HSBC estimates Source: Thomson Reuters Datastream, HSBC estimates Chart 3: ASEAN local indices performance in 2016 (USD, %) Chart 4: ASEAN local indices YTD performance (USD, %) Source: Thomson Reuters Datastream, HSBC estimates Source: Thomson Reuters Datastream, HSBC estimates 19.815.3-0.2-1.6-3.0-50510152025SETJCISTIPCOMPKLCIPerformance (local curr., %)8.26.56.14.51.50.02.04.06.08.010.0STIKLCIPCOMPJCISETPerformance (local curr., %)20.418.0-2.2-6.9-7.2-10.00.010.020.030.0SETJCISTIPCOMPKLCIPerforman ce 201 6 (USD , % )11.87.95.64.94.80.02.04.06.08.010.012.0STIKLCIJCISETPCOMPPerforman ce (U SD , %)Reversal of fortune  We are neutral on Thailand. A modest macro outlook and expensive valuations are mitigated by low rates and yield support  The market outperformed last year, but has been a laggard YTD  Banks are our preferred sector. We think their outperformance can continue  3 EQUITY STRATEGY ● ASEAN 28 March 2017 In our view, the stage may have been set for this relative underperformance. Estimated economic growth is steady, albeit lacklustre. We see the economy’s relatively high reliance on exports amidst growing protectionism as an overhang to possible upward revisions. Meanwhile, domestic prospects appear to be mired in concerns over household income growth and debt, w