Thai stock exchange rises 1.5% but investors remain cautious

The Stock Exchange of Thailand (SET) experienced a 1.5% rise on October 11, attracting foreign investors who bought almost 3 billion baht (US$82,648,050) in stocks. Despite this, seasoned investor 50 year old Watchara Kaewsawang, exhibited caution about re-entering the market, citing the recent increase as a short-lived technical rebound following a series of downturns.

Watchara acknowledged that his trading activity had been reduced this year, mirroring the experiences of many investors who have seen their portfolios dwindle by 8% as a result of the SET’s poor performance.

Between January and September of 2023, the SET index plummeted by 11.8% year-on-year, while September witnessed a 6% decline. Foreign investors have been net sellers for eight consecutive months, with an outflow of 22.4 billion baht recorded in September.

Watchara attributed the market’s poor performance to a combination of factors, including the outcome of the election, which failed to stimulate the typical post-election market rally. The inability of the Move Forward Party, despite garnering the most votes, to establish a new government also contributed to investor apprehension.

The state of the market was further complicated by the low interest rates in Thailand compared to other nations, which resulted in capital outflows and the depreciation of the baht. The ambiguity surrounding the government’s policies also impacted investor confidence, contributing to the stock market contraction, reported Bangkok Post.

Established value investor Nives Hemvachirakorn pinpointed the 8% drop in the Thai index from the end of August to October 7 to a series of interest rate hikes by the US Federal Reserve. However, he noted that unlike the S&P 500 and Nasdaq, which have seen positive growth this year, the SET index contracted by 13.8%.

Stagnant SET index

Nives emphasised that the foreign divestment of nearly 1 trillion baht worth of Thai stocks over the past decade has kept the SET index stagnant. Other contributing factors included Thailand’s low economic growth, the performance of SET-listed companies, and foreign net outflows.

Despite some signs of optimism, such as a recent uptick in the SET index and hints from Fed officials about an end to rate hikes, Bualuang Securities’ vice president, Padoempob Songkroh, expressed scepticism about the possibility of a significant recovery in the fourth quarter. He also predicted bleak prospects for the first quarter of 2024.

Meanwhile, Kavee Chukitkasem, head of research and content at PI Securities, offered a more optimistic outlook, predicting the SET index to rebound to 1,500-1,550 points by the end of the year. He suggested that the Federal Reserve may hold off on further rate increases for the remainder of the year.