In the intricate arena of Thailand’s financial markets, the recent maneuvers by CP Axtra (CPAXT) have commanded significant attention. Their investment in The Happitat, a segment of The Forestias multi-use real estate project developed by Magnolia Quality Development Corp (MQDC)—both entities under the expansive Charoen Pokphand Group—has sparked a spectrum of reactions among investors and market analysts.
The Forestias project, notable for its ambitious scale and substantial financial demands, has raised questions regarding its market demand and the strategic prudence of such an investment. In response, CPAXT has delineated its involvement, emphasizing a focus on rental properties, including community malls and office spaces, thereby seeking to mitigate concerns about overextension. Nonetheless, the intertwining of these companies within the same corporate conglomerate has elicited discussions about corporate governance and the potential for conflicts of interest.
The reverberations of this investment decision have been palpable in the stock market. Shares of CPALL, the parent company of CPAXT and operator of prominent retail chains such as 7-Eleven, Makro, and Lotus’s, have experienced notable fluctuations. The market has observed substantial selling activities, predominantly attributed to institutional investors recalibrating their portfolios and engaging in intraday program trading. This surge in trading activity has contributed to heightened volatility, with the Stock Exchange of Thailand (SET) Index retracting to the vicinity of the 1,400 threshold.
Throughout 2024, Thai equities have exhibited a gradual recovery, aligning with regional counterparts like the Philippines and Indonesia, while South Korea has lagged. Despite this, the SET Index faces challenges in surpassing its closing mark of 1,415.85 points from the end of 2023, especially in light of the recent downturns. In contrast, other major markets, including the United States, Taiwan, Vietnam, Hong Kong, and China, have achieved gains exceeding 10%, underscoring a relative underperformance of the Thai market on the global stage.
As the year draws to a close, projections suggest that the SET will persist in a consolidation phase, with limited prospects for year-end strategic adjustments by fund managers and brokerage firms. The anticipated trading range for the SET Index is between 1,390 and 1,430 points, with a possibility of maintaining a flat trajectory for the month. Potential upward movements are contingent upon the performance of influential stocks such as DELTA and CCET, as well as interconnected entities like GULF, ADVANC, and INTUCH, alongside banking institutions including KBANK, KTB, and BBL. Conversely, leading companies in the commerce and tourism sectors appear to have diminished in their market impact.
Looking ahead to early 2025, a prudent investment approach is advisable, given the advanced stage of the current business cycle. Emphasis on robust, large-cap companies in sectors such as staple goods, information and communication technology, power, healthcare, and food is recommended. In contrast, industries like chemicals, property development, building materials, packaging, and automotive are anticipated to encounter performance challenges.
Positive market catalysts may include potential year-end portfolio enhancements and rebounds in undervalued stocks, fostering a conducive trading environment as the new year commences. Domestically, attention should be directed toward additional economic stimulus measures aimed at bolstering consumer spending power, with a high likelihood of initiatives akin to the Easy E-Receipt scheme being reintroduced.
However, vigilance is warranted concerning potential global economic headwinds in the first half of 2025. Historical data indicates that during global economic downturns, Thai GDP growth forecasts have been subject to more pronounced downward revisions compared to global projections, reflecting the country’s reliance on external economic factors. Post-COVID-19, despite global economic growth, Thailand has experienced a deceleration in GDP expansion, attributed to domestic structural challenges such as escalating household debt and a decline in foreign direct investment inflows, diverging from regional trends.
In summary, the strategic decisions by CP Axtra and their subsequent market implications underscore the complexities of corporate investments within interconnected conglomerates. The broader Thai stock market’s performance reflects a confluence of domestic and international factors, necessitating a discerning and strategic approach from investors as they navigate the evolving financial landscape.
