According to the Stock Exchange of Thailand (SET), the return on investment in the Thai stock market is expected to recover this year, aligning with regional peers as foreign capital inflows have been returning since the end of 2023.
Last year, foreign investors were net sellers of Thai stocks, selling US$5.51 billion worth of stocks compared to a net buy of $5.96 billion in 2022. Despite this, foreign long-term investors still hold a significant portion of the total market outstanding value, similar to the previous year.
SET President Pakorn Peetathawatchai stated that while foreign trading figures in 2023 mostly consisted of short-term investments, signs of economic recovery could lead to a return of foreign investors to the Thai stock market. He also mentioned that foreign investors have been returning to the Thai bourse since the fourth quarter of 2023, with expectations of declining interest rates this year.
It is forecasted that economic growth in Thailand will surpass that of the previous year, and a lower interest rate would have a positive impact on the performance of listed companies, according to Mr. Pakorn.
However, there are still concerns about geopolitical conflicts, US monetary and economic policies, as well as elections in several countries, which may affect the market.
The SET is also planning to extend trading hours by 30 minutes in the second quarter of this year. Additionally, they are implementing a new cautionary sign system to increase supervision of listed companies. This system will be used to indicate potential concerns about a company’s operations, financial statements, or free float requirements.
In 2023, the SET posted a negative return of 15%, while other stock markets in the region had an average positive return of 21.8%. The average daily trading volume on the SET for the year decreased by 30.5% compared to the previous year.
Asia Plus Securities (ASPS) believes that the SET index this year could benefit from an anticipated interest rate cut as the Bank of Thailand’s Monetary Policy Committee (MPC) is expected to adopt a more accommodative monetary policy. They stated that the current SET index is in a good accumulative zone, and a potential interest rate cut could provide an upside to the year-end SET index target.
ASPS estimates that a reduction in interest rates could increase the market earnings yield gap and affect the SET index target positively.
Overall, market earnings in Thailand are projected to grow, with estimates for 2023 and 2024 being 1.05 trillion and 1.18 trillion baht, respectively.
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