The local stock market can shift from a bear to a bull market if the authorities halt anti-investor policies that undermine confidence, causing foreigners to sell more than 100 billion baht worth of Thai shares this year, say analysts.
Paiboon Nalinthrangkurn, chief executive of Tisco Securities and chairman of the Investment Analysts Association, said the Thai stock market is among the few bourses in the region where the index has not returned to pre-Covid levels.
Year-to-date, the Stock Exchange of Thailand (SET) has a negative return of 8.78% and is in a bear market trend.
Mr Paiboon attributed this to Thailand's relatively slow economic recovery compared with other countries that took less than a year to rebound to pre-Covid levels.
In addition, China's slow recovery after reopening is another factor hurting the Thai stock market, he said.
The tourism sector is the key economic driver, said Mr Paiboon. Exports still face many obstacles to expansion, contracting for seven consecutive months.
The profits of listed companies have decreased while the delay in forming a new government has added to investors' concerns, making them more likely to dump Thai shares, he told an investment seminar recently.
"Thai stocks still have a chance to rebound if the government can be formed quickly and introduce economic policies that are acceptable to the capital market. This will help ensure the business sector is taken care of," said Mr Paiboon.
"The Thai stock market is not inexpensive now, but it lacks appeal to long-term capital. Long-term foreign funds are not interested in Thai stocks because they don't offer attractive returns."
Thailand needs a new economic engine to generate more revenue in the future and the government should encourage the capital market to be the main source of funding for the entire economy, he said.
"If the policies are not friendly to the capital market, investors will run away," said Mr Paiboon.
Daol Investment Management said while the Thai bourse is on the decline, it represents an opportunity to invest.
The brokerage is launching Daol Thai Opportunity, a Thai equity fund, which mainly invests in the local stock market. The fund is open to investors from June 22-28.
Daol Investment Management forecasts the net profit of Thai listed companies will grow 6.9% this year and 13% in 2024.
The brokerage said the SET index remains on course to reach 1,680 points in 2023.