- The Stock Exchange of Thailand (SET) anticipates a potential rebound for Thai stocks in the second half of the year, driven by recovering tourism and exports, a weaker baht, and increased fiscal budget disbursement.
- Despite recent geopolitical tensions and volatile oil prices, investor concerns have eased, with attention now focused on US inflation and the Federal Reserve’s interest rate decisions.
- Thailand’s capital market evolution traces back to the 1960s, reflecting the nation’s commitment to economic development, while challenges persist, including declining trading volumes on the Thailand Futures Exchange.
SET anticipates for the recovery of Thai stocks
As global markets continue to navigate uncertainty, SET anticipates a potential rebound for Thai stocks in the latter half of the year. Factors such as recovering tourism and exports, a weaker baht, and increased fiscal budget disbursement are expected to bolster market performance after a 2.7% decline year-to-date, positioning Thailand’s stock index among the worst performers globally.
Soraphol Tulayasathien, senior executive vice-president of the SET, highlighted the recent easing of investor concerns over geopolitical tensions in the Middle East and volatile oil prices. “Investors were less anxious over escalating geopolitical conflicts in the Middle East. Oil and gold prices soared last month as inflation may decline slower than expected,” he noted during a recent briefing.
The fluctuation of the baht against the dollar in April, with the local currency leading declines among Asian peers, remains a point of monitoring for investors. Additionally, attention is focused on US inflation and the Federal Reserve’s decisions on interest rates. Although the Fed has maintained its policy rate for a sixth consecutive meeting, chairman Jerome Powell’s cautionary remarks suggest a prolonged period of high rates, impacting global market sentiment.
Looking ahead, Mr. Soraphol expressed optimism about Thailand’s economic outlook for 2024, citing anticipated growth in private consumption and the tourism sector. “Government spending will likely be another impetus for the remainder of this year after public spending and investment shrunk because of a delayed budget bill for fiscal 2024,” he added.
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SET has a bright performance surprisingly
In response to these developments, analysts have revised forward earnings per share for the SET index, while many Thai stock sectors remain undervalued compared to historical averages. Despite a 0.7% monthly decline in April, the SET index’s performance outpaced regional averages, with year-to-date losses mitigated by improved investor sentiment.
The SET’s forward price-to-earnings (P/E) ratio stands at 14.6 times, exceeding the Asian bourses’ average, with a dividend yield ratio of 3.40%, surpassing regional counterparts. However, challenges persist, as demonstrated by a decline in trading volume on the Thailand Futures Exchange (TFEX), down 8% monthly and 21.6% year-on-year for the first four months of 2024.
Background: The evolution of Thailand’s capital market
The origins of Thailand’s modern capital market can be traced back to the implementation of the first National Economic and Social Development Plan (1961-1966), aimed at promoting economic growth and stability. Subsequently, the establishment of Thailand’s first regulated stock exchange was proposed under the Second National Economic and Social Development Plan (1967–1971), reflecting the nation’s commitment to mobilising capital for economic and industrial development.
The modern era of the Thai capital market began with the privately-owned Bangkok Stock Exchange, followed by the establishment of the Securities Exchange of Thailand, which continues to play a vital role in facilitating capital mobilisation and supporting the nation’s economic objectives.
Challenges and innovations in the industry
Thailand’s capital market faces ongoing challenges, including economic volatility, regulatory changes, and global market dynamics. Innovations such as digital trading platforms, increased transparency, and investor education initiatives have aimed to address these challenges and enhance market efficiency.
As the SET navigates these complexities, the exchange remains committed to fostering a robust and resilient capital market ecosystem that supports economic growth and development in Thailand.
About SET: Nurturing Thailand’s economic growth
The modern Stock Exchange of Thailand (SET) finds its roots in the visionary economic development plans of the 1960s. Initiated under the first National Economic and Social Development Plan (1961-1966), the SET emerged as a critical institution to propel economic growth, stability, and enhance the standard of living for the Thai populace. Subsequently, the Second National Economic and Social Development Plan (1967–1971) laid the groundwork for Thailand’s first regulated stock exchange, acknowledging its pivotal role in mobilising capital to support the nation’s economic and industrial advancement.
The evolution of Thailand’s capital market unfolded through two distinct phases. Initially, the privately-owned Bangkok Stock Exchange marked the beginning of the modern era, followed by the establishment of the Securities Exchange of Thailand. Together, these institutions have been instrumental in fostering a dynamic capital market ecosystem, facilitating investment, and driving economic progress in Thailand.
