Thailand’s stock market has been hit hard, with the SET Index dropping 16% this year. It is now the world’s worst performer among 92 indexes tracked. Over the past 12 months, foreigners have pulled out $4.2 billion, the most across Southeast Asia.
The government tried to revive the market by injecting $4.5 billion into the Vayupak Fund seven months ago. However, analysts remain perplexed by how little it has helped. The headwinds were made worse by the US tariff war, which added pressure as a stronger dollar forced investors to flee emerging markets.
Narongsak Plodmechai, CEO at SCB Asset Management, said, “Most people realize our equities are trading at very cheap valuations, but it’s very hard to convince them to invest in stocks now with poor sentiment and a weak economic outlook.”
Thailand’s household debt pile remained stubbornly high.
thai market turmoil persists
Economic growth also failed to meet most forecasts, with 2024 marking the slowest growth rate among its Southeast Asia peers.
Consumption and manufacturing sectors were also showing signs of slowing. Investors say that hopes for a turnaround lie with Prime Minister Paetongtarn Shinawatra’s young government to take more forceful measures to revive the economy. That would include creating a more business-friendly environment and stronger regulatory reforms.
Earlier this month, Thailand announced a $44.4 billion cash handout plan to stimulate growth, called for a weaker currency to support tourism and exports, ramped up infrastructure investments, and proposed legalizing casinos. Last week, it announced tax incentives for investments into the market. Chavinda Hanratanakool, CEO of Krung Thai Asset Management which co-manages the Vayupak Fund, said, “We just hope that the government’s serious attempts to boost economic growth will succeed.
That will be the most important driver for Thai equities.”
Kaushal Ladha, head of research Thailand for Macquarie Capital, added, “We continue to see foreign outflows as there are no clear catalysts that Thailand will overcome its structural challenges,” and “there has been a general lack of conviction in buying” by domestic funds too.
