Capital market and business valuation insights - November 2023

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• The Thai capital market (SET index) declined 2.3% from the previous quarter due to uncertainty in the global economy and geopolitical risk. Market sentiment was also impacted by the high-profile allegation of financial impropriety and defaults of Stark Corporation PCL. The Israel-Hamas conflict that started on 7 October will bring additional unpredictability to the global market.
• In September 2023, The Bank of Thailand (“BOT”) revised the estimate of Thai economic growth downwards for 2023 from 3.6% to 2.8% due to weak demand and lower private investment but increased its growth projection for 2024 from 3.8% to 4.4%, with key tailwinds from a continued recovery in tourism, a turnaround in merchandise export, and expansion in domestic consumption.
• Banking stresses in advanced economies have had a limited impact on Asian financial markets and banking systems. Commercial banks in Asia remain strong with high levels of capital and prudent liquidity safeguards.
• The Thai baht depreciated against the US dollar from 35.7 USD/THB in the previous quarter to 36.7 USD/THB as at 30 September 2023 based on BOT’s average selling rates, underpinned by rising oil prices and concern over a further increase in the fiscal deficit due to additional economic stimulus policies introduced by the country's new coalition government.

• The SET outperformed the VNI but lagged behind MSCI EM and JCI indices over the 1-year observation period. Returns appear to have been weighed down by the price performance of constituents in the traditional economy while technology players have remained the only sector with a positive 1-year annualised return. The SET and JCI had lower 1-year volatility than the other compared indices in emerging markets. 

• Total return index (TRI) is an index that measures the total return from investing in securities. It comprises (1) a return arising from the change in value of the securities or “capital gain/loss”, and (2) dividends paid, assuming they are reinvested in the securities.
• Dividend yields have shown a slight declining trend owing to the expansion of value share of non-dividend-paying sectors and recent earnings trends across the traditional economy. 

• The SET sector classification serves as the principal criterion for the illustrated sectors.
• The calculation of the sector valuation multiples excludes company multiples outside of the first- to third-quartile range.
• 12-month trailing multiples are derived from Q3/2022 to Q3/2023.
• Q3/2023 multiple is based on the latest available financial statement information as at Q2/2023.
• Data in historical periods may change according to Capital IQ’s retrospective adjustments.

• The total number of trading days per year is assumed to be 252 days.
• The period in the study is 1 October 2018 – 30 September 2023.

• Annual dividend yields are based on dividend yields from Bloomberg.

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