Potential slump for Thai stock market due to digital wallet scheme delay

The Thai stock market is facing a potential slump this month, following a 6.1% drop in October and a 17.2% decline year-to-date, due to potential delays to a significant digital wallet scheme and a slower-than-anticipated recovery in the tourism sector. Such concerns are sparking significant investor anxiety, according to industry analysts.

Sompong Benjathepanan, the assistant managing director at AIRA Securities, highlighted that the Stock Exchange of Thailand (SET) index shed 100 points, making it the second-poorest global performer after Israel’s exchange. He also raised concerns about the Thai government’s economic stimulus policies.

“They lack clarity in terms of funding sources.”

Sompong also pointed out that recent reports hinting at a potential delay to the 10,000-baht digital wallet scheme until September could further weaken investor sentiment.

“The Thai economy needs stimulus to shore up growth.”

Rakpong Chaisuparakul, senior vice president at KGI Securities (Thailand), echoed Sompong’s sentiments, adding that the Thai stock market’s steeper-than-expected decline in October was due to both international and domestic negatives.

He attributed the external factors to the rise in bond yields in the US and Thailand and increasing global geopolitical risks. He also noted that the slower recovery rate of the domestic tourism sector, primarily due to a decrease in the number of Chinese tourists and the shooting at Siam Paragon mall, significantly impacted the market, reported Bangkok Post.

Rakpong advised market consolidation for November.

“After two months of decline, the SET index should stabilise in November. Global tail-risks remain high, including a possible overshooting of US Treasury yields and the fluid situation in the Middle East.”

Kasem Prunratanamala, head of research at CGS-CIMB Securities (Thailand), said that the recently approved visa exemptions for Indians and Taiwanese from November 10, 2023, to May 10, 2024, would have minimal impact on the tourism sector. He explained that visitors from these two countries represented under 9% of tourist arrivals in Thailand this year.

Despite the challenges, Kasem concluded, the brokerage maintains its expectations of 27 million tourist arrivals this year and 35 million in 2024.

“Thailand’s tourism sector should still be on a recovery path in 2024, but the recovery will face higher geopolitical risks and greater global economic headwinds.”