Conviction is growing that one of the world’s worst-performing stock markets is due for a turnaround, as easing political uncertainty in Thailand and new proposals to spur the economy revive investor confidence.
The Stock Exchange of Thailand on Friday concluded its best week since early 2021, a day after former prime minister Thaksin Shinawatra laid out his vision for the economy and the government now headed by his daughter Paetongtarn, in front of 1,400 business leaders.
The SET index closed up 13.84 points to finish the week at 1,354.87, an increase of 4% from 1,303.00 a week earlier, on healthy daily turnover of 62.5 billion baht. The previous biggest weekly advance this year was 1.6%, in the week ending July 12.
The index climbed for most of the week following the election of Ms Paetongtarn as prime minister. Proposals including a debt restructuring initiative and a revision to the Pheu Thai Party’s signature cash handout plan are fuelling hopes for a return of consumption.
Analysts said the market is warming to the prospects for the third premiership from the Shinawatra family, given their history of serving the needs of people in rural communities as well as advancing commercial interests, said Nirgunan Tiruchelvam, an analyst at Aletheia Capital.
That history, coupled with recent proposals like the digital wallet plan, can be “viewed as a great opportunity for investors”, he added.
The precipitous drop in the SET through the past year was a result of political and legal flip-flops, weaker than expected tourism spending and worries over corporate misconduct. While it is now down by just 4.4% from the start of the year, the benchmark is still 13% below where it was 12 months ago, among the worst in the world.
Foreign investors have been big net sellers of Thai shares for most of 2024, to a total of 128 billion baht as of Thursday.
Looking forward, there may be further upside. While the macro backdrop has become more challenging during the second half of the year, reduced uncertainties, light positioning by foreign investors and earnings delivery could help the rebound sustain in the near term, JP Morgan Chase analysts wrote in a note to clients this week.
