Foreign investor confidence in Thai shares remained strong last month as the Thai bourse recorded net inflows of more than 139 billion baht for the sixth consecutive month.
Foreign investors believe the Thai economy will suffer less of an impact from any food shortages and the tourism industry should revive in the second half, said Stock Exchange of Thailand (SET) president Pakorn Peetathawatchai.
He said the world economy is entering a recession, with high inflation, interest rate hikes, a food crisis, and the global economic slowdown caused by the spread of Covid-19 and geopolitical conflicts that have driven oil prices and manufacturing costs higher.
However, Mr Pakorn said the Thai economy will be less affected by these negative factors because Thailand is a food exporting country and has a good public health system.
He believes the Thai government will be able to control the spread of Covid and declare it an endemic disease. The country's tourism industry will rebound with the reopening while local exporters will also benefit from the baht's depreciation.
Although there are some corrections in the Thai market due to rising inflation and oil prices, Thai stocks remain resilient compared to international stock markets and will continue to see an inflow, he said.
SET senior executive vice-president Soraphol Tulayasathien said concerns over spiralling inflation have propelled many central banks to implement more hawkish monetary policies while China, the world's second largest economy, has been grappling with stringent lockdown measures to contain the pandemic.
The double whammy deepens the global risk of recession, resulting in corrections in multiple asset classes across the world, he said.
However, analysts from several institutions view that global inflation is just shy of its peak and set to be tamed in the near future while expecting China's purchasing managers index to expand in May and the lockdown measures expected to be relaxed in June following a decline in infections.
These positive prospects suggest investors are returning to stock markets, signalled by recent foreign inflows to Asean stock markets.
Mr Soraphol said during the first five months of 2022, a number of foreign investors have flocked to the Thai stock market thanks to a continuous growth in exports which was spurred by the baht's retreat and the gradual and firm recovery of tourism.
Mr Soraphol said these positive factors have helped limit downside for the Thai stock market. The SET Index was up just 0.2% from the previous month to 1,663.41 points at the end of May, but up 0.3% from the end of 2021, above the regional average.
The SET Index was mainly driven by the industries benefitting from the country's reopening such as services, resources, and food and agriculture, Mr Soraphol said.
In May 2022, the average daily trading value of the SET and Market for Alternative Investment stood at 80.1 billion baht, down 26.8% from the same period last year.
Foreign investors dominated trade with net purchases of 139 billion baht, accounting for 47.5% of total turnover for the first five months of 2022.