After hitting a six-month high of US$1.6 billion in August, foreign capital is expected to continue to flow into the Thai stock market for the rest of 2022 as an economic recovery takes hold, coupled with high foreign reserves and sparse impact from geopolitical conflicts, according to the Stock Exchange of Thailand (SET).
SET president Pakorn Peetathawatchai said yesterday foreign investors were net buyers of Thai shares worth $5.17 billion in the first eight months this year. In August alone, net foreign inflows amounted to 57 billion baht, the highest number since March this year.
Apart from an economic recovery, positive momentum has been driven by strong profit growth among listed companies this year. Many Thai industries fit global trends such as environment, social and governance or food and beverage, Mr Pakorn said, while tourism is on the rebound.
Some listed Thai firms expanded their business to the international market to capture growth potential in other countries, he said.
"We are confident Thai stocks will perform well compared with other emerging markets in this region," said Mr Pakorn.
SET senior executive vice-president Soraphol Tulayasathien said investors across the world weighed the Fed chairman's remarks at the Jackson Hole Symposium regarding more rate hikes to come until US inflation is contained. US Treasury yields for both short-term and long-term spiked after his remarks, affecting foreign exchange rates and asset prices around the globe.
Mr Soraphol said despite the uncertainties surrounding central banks' monetary policies in many countries, the SET Index was less volatile in the first eight months of 2002 than other indices of major stock markets, thanks to Thailand's continued economic recovery and the rebound of the tourism sector and domestic consumption.
In addition, listed companies delivered solid growth in the first six months, particularly in the second quarter, with a combined net profit of 350 billion baht ($9.52 billion), he said.
The SET Index's historical and forward price-earnings (P/E) ratios are still attractive when compared with their averages in the recent past, said Mr Soraphol. Listed companies also have a chance to increase their dividend payout ratios to be in line with their operating performance, while commercial banks look set to pay higher dividends after the Bank of Thailand lifted the dividend curbs.
At the end of last month, the SET Index closed at 1,638.93 points, up 4% from the previous month, beating the average of indices of other regional bourses. The SET Index decreased by 1.1% from the end of 2021.
In the first eight months of 2022, the SET was propelled by industries that benefited from the reopening of the country. The services and resources sectors outperformed the SET Index during this period, he said.
In August, one company listed on the SET -- Thachang Green Energy (TGE) -- and another on the Market for Alternative Investment -- Yong Concrete Plc (YONG).
The Thai bourse's total fundraising value through initial public offerings ranks among the top in Asia this year, said Mr Soraphol.
The SET's forward P/E ratio was 15.7 times at the end of August, ahead of the Asian bourses' average of 12.6 times, while its historical P/E ratio stood at 16.7 times, higher than the Asian bourses' average of 13.2 times.