Thai equity up 10.9% YTD
The Thai equity-tracking iShares MSCI Thailand Capped ETF (THD) was up 10.9% YTD as of August 24. The stock market of this Asian (AAXJ) (VPL) emerging market (EEM) (VWO) has benefitted from the strengthening baht, positive trade data, tourism, and increased public spending. However, with the central bank of Thailand warning traders of a potential reversal, investors in Thai equity should remain watchful of stocks that may be the first to fall prey.
| Thailand Stock Exchange – Top 10 Stocks with Highest RSI | Return % (as of Aug 25) | ||||||
| Ticker | Name | Industry | RSI | YTD | 6M | 1Y | P/E |
| SORKON.BK | S Khonkaen Foods PCL | Food Products | 87.7 | 30.0 | 28.9 | 19.7 | 19.8 |
| PATO.BK | Pato Chemical Industry PCL | Chemicals | 85.4 | 51.9 | 40.4 | 66.9 | 12.4 |
| WHART.BK | WHA Premium Growth Freehold & Leasehold | REITs | 85.1 | 0.3 | 2.4 | 1.8 | 24.3 |
| BAT-3K.BK | Thai Storage Battery PCL | Auto Components | 84.9 | 108.2 | 65.5 | 48.7 | 128.0 |
| PR.BK | President Rice Products PCL | Food Products | 82.9 | 14.5 | 11.6 | 8.8 | 14.7 |
| GRAMMY.BK | GMM Grammy PCL | Media | 82.7 | 50.6 | 27.2 | 59.8 | — |
| LALIN.BK | Lalin Property PCL | Real Estate Management & Development | 82.2 | 10.5 | 8.1 | 27.7 | 7.6 |
| ASIMAR.BK | Asian Marine Services PCL | Machinery | 81.4 | 18.3 | 11.9 | 1.0 | 10.8 |
| SPI.BK | Saha Pathana Inter-Holding PCL | Real Estate Management & Development | 81.0 | 51.3 | 54.8 | 80.4 | 8.7 |
| TREIT.BK | TICON Freehold & Leasehold Real Estate I | REITs | 80.8 | 3.6 | 4.1 | 0.1 | 11.0 |
Why a near-term reversal in Thai equity may not be in the cards
The relative strength index (RSI), which determines whether a stock is overbought (RSI above 70) or oversold (RSI below 30), is a handy tool for this assessment. The RSI oscillates between zero and 100. We took a quick look at the RSI levels of the universe of stocks trading on the Thailand stock exchange as of August 25th. Turns out, of the 574 stocks that currently trade on the Thai market, 25 have RSI > 70; implying these stocks have been overbought in the market. Around 49 stocks currently lie in the oversold category with the RSI < 30. Average RSI for all the stocks trading at the exchange came out to be 47.3, which is closer to the oversold threshold (i.e. RSI<30). We, therefore, do not expect a near-term reversal in the Thai stock market.
Overbought Thai equity – dominated by real estate
However, investors may want to watch stocks that are currently deep into the overbought category. Now, most of these stocks have delivered exceptional returns so far this year. However, at RSI levels such as those charted above, prudence demands that investors remain cautious of any impending reversal in these stocks. Above is a list of the top 10 equities with the highest RSI at the Stock Exchange of Thailand currently. Notably, real estate related firms dominate the list.
