Upgrades attracting offshore fund inflows
Offshore fund flows are expected to continue moving into Thailand's stock market, supported by the country's strong economic fundamentals and positive issuer rating outlook despite heightening external risks, says the Stock Exchange of Thailand (SET).
Recent upgrades from stable to positive of Thailand's long-term foreign currency issuer default rating by Fitch Ratings and the government's issuer rating by Moody's Investors Service are attracting offshore inflows into the capital market, said SET senior executive vice-president Soraphol Tulayasathien.
A possible upgrade of Thailand's sovereign credit rating could entice further foreign capital inflows, said Mr Soraphol.
Low public debt and ample foreign reserves are also factors supporting confidence in Thailand's economic fundamentals, he said.
Although month-to-date foreign investment in the Thai stock market was net sales of 15 billion baht, year-to-date equity investment by foreign investors recorded net inflows worth 45.7 billion as of Aug 7.
Rising tensions in the Sino-US trade row warrant close watching as the dispute previously spun into a tech war based on the Huawei sanction saga, but has since morphed into a currency war as China recently devalued the yuan to the lowest in a decade against the greenback.
Central banks across the globe have also begun to embark on monetary policy easing to ward off risks derailing economic growth prospects, said Mr Soraphol.
"If there is a major factor that affects market sentiment, the SET will actively report it to the public, therefore investors should monitor global factors closely," he said.
SET president Pakorn Peetathawatchai said the global economic slowdown and increasing external risks have prompted central banks to cut interest rates, with the Bank of Thailand among those opting for monetary policy stimulus.
"It is not surprising to see a cut in the local policy interest rate [because of increasing risks to economic growth]," said Mr Pakorn.
The slowdown is affecting the supply chain of Thai corporations, but they can handle this by diversifying into different markets to offset risk, he said.
The SET index dropped 1.1% in July from the previous month, but increased 9.5% from year-end 2018 to close at 1,711.97 points.
Average daily trading value of the SET and Market for Alternative Investment indices in July was valued at a combined 64.05 billion baht, up 23% year-on-year. Foreign investors were net buyers of Thai shares for the fourth consecutive month, representing the highest monthly net inflows in Asean in July.