A possible delay to the costly digital wallet scheme and a slower than expected tourism recovery could dampen sentiment in the Thai stock market this month after the index contracted 6.1% in October and is down 17.2% year-to-date, say analysts.
Sompong Benjathepanan, assistant managing director of AIRA Securities, said the Stock Exchange of Thailand (SET) index has lost 100 points, making it the second-worst performer globally after the Israeli exchange.
"The Thai government has announced economic stimulus policies, but they lack clarity in terms of funding sources," he said.
"Recent news emerged that the 10,000-baht digital wallet scheme could be delayed to September, further stifling sentiment as the Thai economy really needs stimulus to shore up growth."
Rakpong Chaisuparakul, senior vice-president at KGI Securities (Thailand), said the Thai stock market declined sharply and was weaker than expected in October amidst negative factors from both the external and internal sides. On the external front, US and Thai bond yields have rallied further and global geopolitical risks increased as Israel and Hamas entered a state of war in the second week of the month.
On the domestic side, the pace of recovery of the tourism sector was slower than expected, mainly due to weaker momentum in the number of Chinese tourists as Beijing focused on its domestic tourism and there was a shooting at Siam Paragon mall in early October, he said.
"Our market view for November advises consolidation," said Mr Rakpong. "After two months of decline, the SET index should stabilise in November. Global tail-risks remain high, including a possible overshooting of US treasury yields and the fluid situation in the Middle East.
"While tactically we believe the SET index could find its footing after the recent slump, there are still no positive catalysts to drive a strong reversal in the market over the next few weeks."
Kasem Prunratanamala, head of research at CGS-CIMB Securities (Thailand), said the recently approved visa exemptions for Indians and Taiwanese from Nov 10, 2023 to May 10, 2024 will "have a small impact on the tourism sector" as visitors from these two countries accounted for less than 9% of tourist arrivals in Thailand this year.
The brokerage expects 27 million tourist arrivals this year and 35 million in 2024.
"Thailand's tourism sector should still be on a recovery path in 2024, but the recovery will face higher geopolitical risks and greater global economic headwinds," Mr Kasem told the Bangkok Post.