There is a growing belief that one of the world’s poorest-performing stock markets is on the verge of a recovery, as diminishing political uncertainty in Thailand and new economic proposals boost investor confidence.
On Friday, the Stock Exchange of Thailand wrapped up its best week since early 2021, following a presentation by former Prime Minister Thaksin Shinawatra, who shared his vision for the economy and the government now led by his daughter Paetongtarn, in front of 1,400 business leaders.
The SET index gained 13.84 points, closing the week at 1,354.87, representing a 4% increase from the previous week’s 1,303.00, with a robust daily trading volume of 62.5 billion baht. The largest weekly increase earlier this year was merely 1.6%, recorded for the week ending July 12.
Throughout the week, the index saw consistent gains following Ms. Paetongtarn’s election as prime minister. Proposed initiatives, such as debt restructuring and revisions to the Pheu Thai Party’s flagship cash handout plan, are generating optimism for renewed consumer spending.
Analysts suggest that the market is becoming more optimistic about the Shinawatra family’s return to leadership, as they have historically addressed the needs of rural communities while also promoting commercial interests, according to Nirgunan Tiruchelvam, an analyst at Aletheia Capital.
He added that this history, combined with recent proposals like the digital wallet initiative, represents a significant opportunity for investors.
The substantial decline in the SET over the past year was attributed to political instability, legal issues, lower-than-expected tourism spending, and concerns over corporate governance. Although the benchmark is now down just 4.4% since the beginning of the year, it remains 13% lower than it was a year ago, ranking among the worst in the world.
Throughout most of 2024, foreign investors have significantly sold off Thai shares, amounting to a total of 128 billion baht as of Thursday.
Looking ahead, there’s potential for further recovery. Despite a more challenging macroeconomic environment in the latter half of the year, analysts from JP Morgan Chase noted that decreased uncertainties, minimal foreign investor positioning, and improved earnings could help sustain the rebound in the near term.
