Thai stock market is a favorite among foreign shareholders

Last month, foreign investor confidence in Thai stocks stayed strong, with the kingdom’s stock exchange recording net inflows of nearly 140 billion baht for the sixth month in a row.

International investors believe that any food shortages will have a minimal effect on the Thai economy and that the tourism sector will rebound in the second half of 2022, according to Stock Exchange of Thailand president Pakorn Peetathawatchai.

Increasing inflation, a rise in interest rates, a food shortage, and a worldwide economic downturn caused by the spread of Covid-19 and global conflicts, such as the war between Russia and Ukraine, have forced up oil and manufacturing prices, putting the world economy on standby for a recession. Many countries have already registered at least one quarter of negative growth, including the US. Two successive quarters of negative growth = a technical rescission. Many financial commentaries believe many of the leading economies are already in recession.

And whilst some of the leading stocks and indexes have had wild growth before the start of this year, this year’s results have been negative across all the leading indexes with some individual stocks, particularly in the tech sector, recording dramatic falls in 2022. So Thailand’s stock market seems relatively stable in comparison now.

Since Thailand is a major food exporting nation with a strong public health system, any negative effects will have a smaller impact on the Thai economy than other nations.

With the reopening of foreign borders, Thailand’s tourism industry will revive, while local exporters will gain from the baht’s decline (against the US currency for example). The spread of coronavirus is now largely under control, and the pandemic will be declared an endemic disease by the Thai government within the next few months.

Although the Thai market has experienced some dips as a result of higher inflation and oil costs, the nation’s shares have remained strong in comparison to international stock markets.

Several large foreign investors returned to the Thai stock market between January and May, fuelled by a steady increase in exports driven by the baht’s fall and a gradual but steady rebound in tourism.

The Thai stock market’s decline has been limited by favourable factors. At the end of May, the SET Index increased 0.2% from April, but up 0.3% by the end of 2021, which was higher than the regional average. For the first five months of this year, foreign investors dominated trade with net buys of 139 billion baht, accounting for 47.5% of total turnover.

SOURCE: Bangkok Post