Despite concerns over a financial bubble forming in the Stock Exchange of Thailand (SET) index, the influx of foreign capital in the Thai bourse remains below the level seen 13 years ago, says Asia Plus Securities Plc (ASP).
The SET has been driven by an influx of foreign capital since August 2017. Foreigners have bought Thai stocks worth 19 billion baht as of late August, beating other investor categories.
At that time, average foreign shareholding was 24.2% and non-voting depository receipt shareholding was 6.78%, resulting in total foreign shareholdings of 30.9% in Thai equities versus the peak of 36.9% in 2004, said ASP.
"Foreign investors are switching from expensive markets that already rallied to laggard Asian markets such as Thailand and China. The SET is likely to outperform global stock markets for the rest of this year," said executive president Poranee Thongyen. "We have increased our 12-month SET index target to 1,766 points. The index may reach 1,700 points in the next one to two months."
If trading value remains around 70 billion baht for the rest of this year, the 2017 average will be at least 50 billion, said ASP.
The SET index on Monday continued its rally, reaching the highest level in nearly 24 years -- 1,678.23 points. The bourse yesterday stood at 1,672.59 points, up 0.14%.
The SET index reached a high in January 1994, when it rose to 1,753.73 points.
Foreign investors remained net buyers in Thailand's stock market, with year-to-date net inflows totalling 14 billion baht as of Sept 18, with net inflows worth 11 billion logged that month, said SET president Kesara Manchusree.
Tisco Securities chief executive Paiboon Nalinthrangkurn recently said foreign funds have shifted from stock markets in Indonesia and Vietnam to Thai stocks due to the former rising 15-20%.
High financial liquidity in global financial markets and the low interest rate environment worldwide are also factors prompting foreign fund flows to channel into the Thai bourse, he said.
Apple Wealth Securities deputy managing director for research, Apichai Raomanachai, said the SET index is projected to move in a narrow range as investors are still waiting for results of the Federal Open Market Committee meeting, being held from Sept 19-20.
"It's still difficult for the SET index to stay above 1,680 points as investors will reduce their exposure risks," said Mr Apichai.