Foreign fund inflows moved into Thai equities and long-term bonds in January, signalling a risk-on investment appetite on higher yields and positive earnings expectations, says the Stock Exchange of Thailand (SET).
"Stock trading picked up last month, recovering from December's dip, with almost half of the trading volume attributed to foreign investors," said Soraphol Tulayasathien, senior executive vice-president and head of the corporate strategy division at the SET.
Factors propelling investor confidence included improved prospects of the Sino-US trade negotiations, a marginal rise in oil prices and the clarity of the general election date, Mr Soraphol said.
The US Federal Reserve's signal on cautious interest rate normalisation also gave a boost to risk appetite, he said.
"The stock market resumed a risk-on mode, which was different from last year," Mr Soraphol said. "Fund flows moved into the Thai stock and bond markets, with outflows seen in short-term bonds, signalling foreign investors' rising confidence in Thailand's economy."
According to the SET, foreign net inflows totalled 1.5 billion baht for government bonds and 7.3 billion baht for domestic equities from Jan 1 to Feb 1.
Foreign net outflows from Bank of Thailand bonds were worth 15.5 billion baht during the same period.
Mr Soraphol said the foreign net inflows were an interesting development, as there were foreign net outflows of 287.7 billion baht from the Thai capital market and 55.5 billion baht from the central bank's bonds in 2018.
Some 190.5 billion baht worth of net capital was shifted to government bonds, he said.
The SET index closed January at 1,641.73 points, up 5% from year-end 2018, with daily turnover averaging 48.6 billion baht, up 15.5%.
Institutional investors and foreign investors were identified as net buyers of Thai equities last month.
Foreign investors bought domestic shares worth 6.6 billion baht in January, in line with foreign net equity purchasing seen across most Asian stock markets.
The combined value of market capitalisation of the SET and the Market for Alternative Investment was 17 trillion baht, up 5% from year-end 2018.
SET president Pakorn Peetathawatchai said MSCI is currently conducting a market hearing from investors on whether to include foreign investors' investments in non-voting depository receipts in the MSCI emerging markets index.
If such investments are included, it could have a positive effect on the weight of Thai equities traded on the MSCI emerging markets index, Mr Pakorn said.