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Global investor sentiment has improved following an easing of US-China trade tensions after talks on Wednesday between presidents Donald Trump and Xi Jinping. The 10% reduction of the “fentanyl tariff” on Chinese goods is good news for Beijing as well as US consumers.
Meanwhile, a September US inflation figure of 3%, slightly below market expectations of 3.1%, paved the way for the Federal Reserve to cut its benchmark interest rate by another 25 basis points (bps) to a range of 3.75% to 4.00% at its October meeting. We expect another cut of 25bps in December.
In addition, 86% of the S&P 500 companies that have reported quarterly earnings have exceeded expectations by 7.7%, the highest level in the past four quarters, supporting record-high index readings.
We expect global equity markets will perform well in November based on lower trade tensions, reduced geopolitical risks and earnings upgrades. We maintain our overweight rating on the US, China and India markets.
In Southeast Asia, equity markets showed resilience amid global volatility in October, with the MSCI Asean Index up 1.2% for the month, bringing year-to-date returns to 10%.
The highlight for the month continues to be Vietnam, as the much-anticipated FTSE Emerging Markets upgrade materialised, which will open the country’s bourse to more foreign funds. Helped along by 8.2% GDP growth, the broad VN-Index on the Ho Chi Minh City Stock Exchange rose by 4.5% in October, driving year-to-date gains to 32%.
The recent Asean Summit in Kuala Lumpur marked a significant moment for US-Asean relations, with Washington signing several bilateral trade and critical minerals agreements with Asean member states including Thailand. Trump also oversaw the signing of a Thailand-Cambodia declaration to work towards restoring normal relations.
Going forward, the improvement in domestic budget disbursement and political clarity in both Indonesia and Thailand may lead to improvements in capital markets.
In Thailand, we see limited upside for the SET index in the near term and maintain year-end targets at 1,290 points for 2025 and 1,370 for 2026. Earnings pressure persists from a slowing economy, weak consumption and a delayed tourism recovery, while political uncertainty and limited fiscal stimulus add to headwinds.
Although the Bank of Thailand may cut interest rates to 1.0% by early 2026, we think this development is largely priced in and unlikely to drive a broad rerating for Thai equities. As such, we prefer resilient and investment-linked sectors such as construction, industrial and utilities, supported by rising Board of Investment approvals and public infrastructure spending.
NOVEMBER OUTLOOK
The Bloomberg Consensus forecast for third-quarter earnings of Thai listed firms is for 27% year-on-year profit growth, led by information and communication technology, banks and refineries. This would represent a 10% quarter-on-quarter decline from a high base.
With 33% of companies reporting so far, earnings have beaten expectations by 14%, limiting downside risks. Our picks for November are:
GFPT (target price 12 baht): Third-quarter core profit for the chicken processor is expected at 670 million baht, an increase of 20% year-on-year and 2% quarter-on-quarter, driven mainly by a higher gross profit margin, reaching a record high of 19.7%, compared with 16.7% in the second quarter. The margin improvement stems from lower feed costs, particularly soybean meal and corn prices. Earnings in the fourth quarter are expected to sustain strong year-on-year growth thanks to recovering production capacity and higher domestic chicken prices.
TRUE (target price 14.40 baht): Core profit for the telecom operator in the third quarter is projected at 4.8 billion baht, an increase of 67% year-on-year and 15% quarter-on-quarter. The improvement is supported by stable revenue, cost savings from network depreciation due to tower consolidation with DTAC, and frequency cost reduction of 5 billion baht a year starting from August 2025. These factors will underpin robust core profit growth of 108% year-on-year in 2025 and 18% in 2026.
TTB (target price 2.10 baht): We believe the bank can sustain net profit beyond the expiry of its tax benefits by reducing credit costs and operating expenditure in 2027. Its asset quality has improved with lower non-performing loan formation and normal credit costs. We see an opportunity to accumulate now before the bank resumes its share buyback programme in the first quarter of 2026.