It's been a long time since I've not provided an update to long term charts of the Thai stock market. More exactly over 5 years, because to be honest nothing much happened during those years, but we've got a bit more action this year, so it might be a good time to have another look.
The Thai stock market peaked at around 1,830 in February 2018, and it dropped to under 1,200 in March following the politician answers and lockdowns due to COVID-19. It's back to around 1,350 since them It was a sharp, but let's check more long term charts to find out more about valuations.
One metric is the price earning ratio, and never really went under 10 that historically is a buying opportunity. Getting to 5 or under would be a lifetime buying opportunity, but obviously it does not happen often. We should also expect earnings to drop significantly, and I'm not convinced they'll recoever that quickly so the PER should soon go higher, unless the average price of stocks in the Thai SET goes down as well.
The price to book value ratio is fairly affordable, so that's one metric where the Thai SET looks fair valued or even slightly inexpensive.
From the chart above, a dividend yield of just under 4% look attractive considering current interest rate on fixed deposits are under 1%. Buying large stocks for dividends might be a good way to be paid to wait with limited downside. That would remain true as long as dividends are not cut, and that's not guaranteed considering the environment we live in.
But no buying on my side for now, so I'll be patient, and since I expect the market to move again this year, I'll likely post an update in December.
