Foreign funds flock to Asia amid economic recovery

Foreign funds continued to flow into Asian stock markets in January, backed by the economic recovery and China's reopening, according to a Stock Exchange of Thailand (SET) briefing on Tuesday.

With the baht appreciating, foreign investors last month posted net purchases of more than 58 billion baht combined for the stock and bond markets.

The positive outlook was supported by the rising numbers of tourist arrivals and the likelihood that export growth will resume in the near future.

Investor concern about a deep recession has eased as inflation slows, which could encourage central banks to loosen monetary policy earlier than expected, said SET senior executive vice-president Soraphol Tulayasathien.

"Buoyed by the continuity of the Thai economic turnaround coupled with China's border reopening, funds continued to flow into Asian stock markets, particularly the Thai bourse, in January," said Mr Soraphol.

Last month the SET index rose 0.2% from December to 1,671.46 points, an increase that was consistent with regional peers.

The benchmark index increased 5.6% in dollar terms.

The index last month was propelled by industries that have improved based on Thailand's reopening, with solid earnings expected for the final quarter of 2022.

Consumer products, technology, services, and property and construction sectors fared better than the average SET index for the period.

The Market for Alternative Investment's average daily trading value rose to 72.0 billion baht in January, up from 56.2 billion in December, but fell 23.7% year-on-year.

Foreign investors were net buyers for a fourth consecutive month in January, tallying 19 billion baht, raising their total net purchases to 69.4 billion from October 2022 to January 2023.

Foreign investors have also had the highest trading value ratio for nine straight months, according to the SET.

The value of Thailand's initial public offerings this year should be among the highest in Asia, said Mr Soraphol.

The Thai stock exchange's forward price-to-earnings (P/E) ratio at the end of January was 16.8 times, exceeding the average of Asian stock markets at 12.6 times.

The historical P/E ratio tallied 17.5 times, beating Asian stock markets' average of 13.8 times.

The dividend yield ratio at the end of January was 2.75%, below Asian stock markets' average of 3.00%.

For January, Thailand Futures Exchange's daily trading volume averaged 530,429 contracts, down 23.1% from the previous month, because of the decline in trading volume of Single Stock Futures and SET50 Index Futures.