The Stock Exchange of Thailand (SET) fell by more than 1.5% to below 1,450 points on Tuesday based on rising concerns about growing public debt and economic growth after the World Bank lowered its Thai GDP forecast.
Daol Securities (Thailand) said there was selling pressure from most investor groups on lingering concerns about the Federal Reserve's interest rate hike. The US bond yield and dollar have continued to appreciate, causing the baht to dip to an 11-month low of below 37 baht.
Global oil prices have declined by more than 2%, affecting a Thai bourse that is dependent on energy stocks.
"We see a possibility that the SET index will continue to decline as investors gradually reduce risks, as the Thai market has shown no positive factors lately," Daol said in a research note.
Investors prefer to hold cash and that is a negative trend for the stock market, said the brokerage.
On the domestic side, there is concern about the high level of household debt and the possible expansion of the public debt ceiling. The World Bank on Monday cut its 2023 Thai GDP forecast from 3.6% to 3.4%, and its 2024 outlook from 3.7% to 3.5%, citing an export slowdown and higher public debt that could pressure public and private investments.
Meanwhile, oil supply is expected to increase as Turkey plans to reopen the oil pipeline from Iraq this week after closing it for six months.
Rapidan Group, an energy consultancy, said Saudi Arabia will increase oil production after the Brent crude price exceeds US$90 per barrel.
Wilasinee Boonmasungsong, research director of Globlex Securities, said several negative factors are weighing on the Thai stock market. The World Bank noted concern about rising household debt reaching almost 80% of GDP, the highest in the region.
Foreign investors have been net sellers of 157 billion baht worth of Thai stock this year, while other types of investors have been net buyers.
Ms Wilasinee recommended investors monitor government policies this week as well as export figures and trade data released by the Commerce Ministry. In addition, investors should follow third-quarter bank earnings reports, which will be gradually announced from mid-October, she said.
Asia Plus Securities (ASPS) said the SET index is unlikely to rebound, but the downside is relatively low. The brokerage said the World Bank's updated Thai GDP forecast is still higher than other institutions and hardly affects the SET index.
Economic stimulus measures are expected to pay off from the fourth quarter of this year going forward, with GDP expected to peak in the second quarter of next year, according to ASPS.