Foreign investors sold nearly 100 billion baht worth of Thai shares in the first five months of this year, including 33.4 billion baht divested in May alone, due to rising global interest rates and uncertainties in forming the new government.
But the Stock Exchange of Thailand (SET) expressed its confidence on Tuesday that the recent easing of the US debt ceiling could bolster global sentiment and encourage investors to buy more Thai stocks on the back of a recovering Thai economy.
Soraphol Tulayasathien, senior executive vice-president at SET, said the outflows from the country's bond and equity markets after the May 14 election are expected to be short-lived as investors are concerned about the formation of a new government and a change in economic policy.
"Investors are closely monitoring the situation and analysts are optimistic that foreign fund flows will be reversed if the new government policies do not affect the country's competitiveness and push operating costs higher," he noted.
Moreover, SET's forward price to earnings ratio (P/E) was still below the historical average, and this encouraged individual and local institutional investors to buy with a net position for the January-May period.
"The factor to be monitored is the reduction of the Organisation of Petroleum Exporting Countries' (Opec) output that it might increase the pressure on the economy and investment sentiment again," said Mr Soraphol.
At the end of May, the SET index had risen 0.3% from the previous month and decreased 8.1% from the end of 2022 to 1,533.54 points, in line with other market indices in Asean.
Industry groups that outperformed the SET when compared with the end of 2022 were technology, consumer products, financials, services, and property and construction.
The SET's and the Market for Alternative Investment's average daily trading value dropped 31.6% from the same period of last year to 54.1 billion baht (around US$1.58 billion).
Both markets' trading volume averaged 60.9 billion baht a day in the first five months. Foreign investors were net sellers for the fourth straight month in May to the tune of 33.4 billion baht. However, their trading ratio remained higher than any other type of investors for 13 straight months.
The Thai stock exchange's forward P/E ratio was 16.1 times, above Asian stock markets' average of 12.5 times. The historical P/E ratio stood at 20.8 times, exceeding Asian stock markets' average of 14.1 times.
The dividend yield ratio was 3.17%, below Asian stock markets' average of 3.46%.