Thai stock market hits snooze button despite extended hours

Despite the extension of the Stock Exchange of Thailand‘s (SET) trading hours and looming interest rate cuts by the Bank of Thailand, the Thai market failed to rally yesterday. Concerns over a premature rate cut and the aftermath of a recent terrorist attack near Moscow fuelled investor anxiety.

The SET yesterday, March 25, increased its trading period from 270 to 300 minutes per day. This was achieved by initiating the afternoon session on both the main bourse and the Market for Alternative Investment 30 minutes earlier, now at 1.30pm. This extension brings Thailand’s stock trading duration closer to other regional markets, which typically operate for six to seven hours daily, as noted by Asia Plus Securities (ASPS).

Despite these changes, the SET index experienced a midday dip of 0.36%, a decline that persisted into the afternoon session, ending Monday’s trading with a 0.62% drop. ASPS commented on the extended trading hours.

“Although trading hours have been extended by 11.1%, there are no fundamental drivers.”

The research also suggested that the SET index is unlikely to rally unless the trading value surpasses 50 billion baht per day, turnover exceeds 70%, or interest rates are cut.

ASPS noted that a typical 0.25% interest rate cut could potentially stimulate trading value by 3-4 billion baht.

Therdsak Thaveeteeratham, ASPS Executive Vice-President, commented on the geopolitical factors affecting Monday’s trading. He pinpointed reports of Russia’s plans to deploy 100,000 soldiers for a potential Ukraine attack, which has heightened global investment anxieties.

Echoing Therdsak’s sentiments, Kitpon Praipaisarnkit, Vice-President of UOB Kay Hian Securities Thailand PC, noted a lack of investor confidence stemming from risks in monetary policy. He also highlighted the widening gap between US and Thai interest rates, which has weakened the baht and may stimulate further foreign outflows.

Kitpon further explained that Thailand’s economic growth lags behind its neighbouring countries, pushing foreign funds to other regional stock markets, reported Bangkok Post.

Kasem Prunratanamala, head of equity research at CGS International Securities (Thailand), however, offered a different perspective. He suggested that investors are now predicting a stronger likelihood of the Bank of Thailand’s Monetary Policy Committee initiating rate cuts in its April 10 meeting.