Thai stocks hit 18-month high as baht rallies post new govt formation

Thai stocks surged to their highest levels since March last year, with the baht also experiencing a significant rally. This boost in financial markets follows the formation of the new government, sparking optimism over policy continuity.

The Stock Exchange of Thailand (SET) Index rose by as much as 2.9%, driven by gains in the packaging, information and technology, and petrochemical sectors. The index closed up by 38.79 points, or 2.84%, at 1,404.28, with a substantial turnover of 81.7 billion baht (US$2.4 billion), nearly double the recent weeks’ average.

This marks the first time the SET Index has closed above 1,400 points since the second week of January. Concurrently, the baht strengthened by 1.5% against the US dollar, reaching 33.69—the highest level since May last year.

A stronger baht increases the attractiveness of Thai stocks for dollar-based investors. Despite this, foreign investors remain net sellers of Thai shares this month, with a year-to-date net selling of 127.4 billion baht (US$3.8 billion).

In contrast, global funds have injected US$133 million into Thai bonds in September, marking the third consecutive month of net foreign inflows.

Thai financial assets have also benefited from indications that the US Federal Reserve may slash interest rates during its meeting next week.

Political stability appears to be improving with the appointment of Prime Minister Paetongtarn Shinawatra and her Cabinet.

Tareck Horchani, head of prime brokerage dealing at Maybank Securities acknowledged increasing confidence from investors.

“After government deliberation on policy, they can start the cash handout policy and other stimulus measures.”

The government plans to distribute 10,000 baht (US$300) to eligible Thais over the age of 16 as part of its cash handout policy, expected to start this month. Initially, the handout will be in the form of cash for the most needy, with a broader distribution of digital money to follow, reported Bangkok Post.

Additionally, investor sentiment has been buoyed by the government’s proposal to establish a new Vayupak Fund to invest in local shares and support the market.