Return on investment in the Thai stock market is expected to recover this year, in line with regional peers as foreign capital inflows have been returning since the end of 2023, according to the Stock Exchange of Thailand (SET).
Foreign investors were net sellers of Thai stocks to the tune of US$5.51 billion last year, compared with a net buy of $5.96 billion in 2022. Foreign long-term investors still hold 29.7-30% of the total market outstanding value, similar to the year before.
"Foreign trading figures last year were mostly short-term investments, but when signs of economic recovery appear, we believe foreign investors will return to the Thai stock market," said SET president Pakorn Peetathawatchai.
"We have seen signs that foreign investors are returning to the Thai bourse since the fourth quarter of 2023, continuing into this year as the market expects interest rate hikes have ended and should decline this year."
Economic growth is forecast to exceed last year in 2024, while a lower interest rate would be positive for the performance of listed companies, said Mr Pakorn.
There are some concerns about geopolitical conflicts, US monetary and economic policies, as well as elections in several countries, he said.
Rongrak Phanapavudhikul, senior executive vice-president and head of the Legal Affairs Division, said the SET is still preparing to extend trading hours by 30 minutes in the second quarter of this year.
Trading hours would be expanded to five hours per day, with the afternoon session starting at 2pm instead of 2.30pm.
The SET also plans to increase the level of supervision of listed companies by using the "C" sign as a caution. For example, CB is used when companies may have cause for concern about their operations, such as low equity, low income, consecutive losses or default on debt payments.
The CS sign indicates problems with financial statements, such as the auditor not providing an opinion or the Securities and Exchange Commission ordering a special audit.
The CF sign applies when companies have a free float less than is required by the criteria.
Senior executive vice-president Soraphol Tulayasathien said the SET posted a negative return of 15% last year, while other stock markets posted an average positive return of 21.8%.
The SET's average return for two years (2022-23) is on par with others in the region, he said.
The average daily trading volume was 55.3 billion baht in 2023, down by 30.5% from 76.8 billion a year earlier.
Asia Plus Securities (ASPS) said the SET index this year could be helped by an anticipated interest rate cut as the Bank of Thailand's Monetary Policy Committee (MPC) is expected to adopt an easing monetary policy.
"The SET index is now in a good accumulative zone. The MPC is expected to cut the interest rate, offering upside to the year-end SET index target," said the brokerage.
ASPS estimates a percentage point reduction of 0.25 to interest rates could increase the market earnings yield gap by 0.25% and the SET index target by 77 points.
"The SET index is still low, slightly above 1,400 points and still 200 points lower than in year-end 2021 and year-end 2022," the brokerage said in a research note yesterday.
Market earnings are projected to grow, from 989 billion baht in 2021 and 1.02 trillion in 2022 to 1.05 trillion in 2023 and 1.18 trillion this year.
