Trading troubles: Thai stock market feels pinch of political uncertainties amid global rate rumbles

The Thai stock market remains under pressure from domestic political uncertainties, despite a halt in US interest rate hikes and a recent rate cut in China. The Stock Exchange of Thailand (SET) index continued its downward trend, closing at 1,557.71 points, a 0.22% decrease from the previous day.

In contrast, several Asian stock markets experienced gains, with Hong Kong’s Hang Seng Index surging by 2.17%. The Shenzhen Components and Shanghai Composite also experienced growth, with increases of 1.8% and 0.74% respectively, spurred by both short- and medium-term rate cuts from the People’s Bank of China.

However, political uncertainties loom over the Thai index, which has lost approximately 6% year-to-date. Kitpon Praipaisarnkit, Vice-President of UOB Kay Hian Securities Thailand, expressed concern over local political instability, stating that the Thai bourse could benefit from the Fed’s pause in hiking rates in the short term, but the sentiment will suffer over the next 2-3 months.

According to Kampon Adireksombat, the First Senior Vice-President and Team Head of SCB Chief Investment Office (SCB CIO), the SET index could potentially decrease by another 8% if government formation is delayed, adversely affecting the 2024 budget disbursement. While SCB CIO maintains a mostly positive outlook on the Thai stock market, Kampon highlighted the importance of political stability and the formation of a new government for the restoration of foreign investor confidence.

In a best-case scenario, should the government be formed by the mid-July deadline and only minor delays occur in the 2024 budget, the SET index is projected to reach 1,660 points by the end of 2023, representing a 7% increase from its current level. However, a worst-case scenario of significant government formation delays and prolonged political uncertainty could lead to an 8% drop in the SET index from its present position, reported Bangkok Post.

In recent headlines, the stock exchange has issued a cautionary advisory to investors, strongly encouraging them to diligently scrutinize information and exercise prudence when dealing with OTO shares. To know why, read HERE.