Despite easing concerns over Thailand’s credit rating and renewed optimism for US-China trade negotiations, analysts expect significant volatility in the Thai stock market this month due to rising domestic political risks.
On Wednesday, the Stock Exchange of Thailand (SET) index dropped nearly 1.8%, falling below the 1,300-point mark even as global markets climbed. The dip followed White House spokesperson Karoline Leavitt’s statement that President Donald Trump and Chinese President Xi Jinping are likely to speak by the end of the week—fueling hopes for progress in trade talks.
Analysts noted that concerns over Thailand’s creditworthiness have subsided since S&P Global Ratings reaffirmed the country’s BBB+ sovereign credit rating with a stable outlook on June 2, reducing fears of a possible downgrade.
KGI Securities (Thailand) remains cautiously optimistic for June, pointing to possible momentum in US-China trade relations. The firm projects the SET index to swing within a 100-point range, with political risks likely to weigh on market sentiment in the latter half of the month.
KGI also warned of continued volatility stemming from unresolved tariff disputes and the unpredictability of US trade policy under Trump. These risks, combined with domestic uncertainties, may dampen investor confidence.
In May, the Thai market underperformed regional peers, largely due to trade tensions and the government’s decision to pause the digital wallet stimulus scheme in favor of infrastructure spending.
KGI noted a temporary rebound in global equities in mid-May, triggered by signals from both Washington and Beijing about resuming trade talks. However, progress later stalled as legal challenges to US tariffs clouded the outlook.
Thai stocks linked to domestic consumption and tourism were among the worst performers in May, as foreign arrivals fell short of expectations.
Trinity Securities anticipates a short-term recovery in early June, helped by a slowdown in foreign portfolio rebalancing after recent MSCI index adjustments and a brief lull in trade-related developments. However, the brokerage flagged increasing political uncertainty at home as a major concern heading into mid-June.
Further technical pressures may arise as institutional investors brace for Delta Electronics (DELTA) to be removed from the SET50 index in July under new calculation rules.
Trinity forecasts the SET index to move between 1,100 and 1,210 points this month and suggests that upcoming Thai ESG Extra fund IPO closures could provide some support through fresh capital inflows.
