The Stock Exchange of Thailand is poised to fall into bear-market territory, as the ongoing sell-off by foreign investors and slower economic growth continue to weigh on sentiment.
The benchmark SET Index dropped as much as 0.8% on Tuesday, bringing the losses from its February 2022 high to 20% — the definition of a bear market. The gauge is among the world’s worst performers this year, having shed 17.6% since January.
The index ended the day at 1,373.92 points, down 7.07 points from the day before, amid thin trading turnover of just 35.3 billion baht.
Local equities have continued to see heavy selling by international funds amid concerns over a potential rise in public debt to finance the Pheu Thai government’s planned 10,000-baht digital money handout next year.
Foreign funds have been net sellers of 197 billion baht worth of Thai shares in 2023, the highest outflow among stock markets in emerging Asian peers, according to Bloomberg data. Last year, foreign investors were net buyers of nearly 203 billion baht.
Disappointing economic growth of just 1.5% in the third quarter, down from 1.8% in the quarter before, has also added to the bleak outlook for Thailand. As a result, the National Economic and Social Development Council (NESDC) has cut its GDP growth forecast for this year to 2.5%.
The NESDC predicted a 2% contraction in exports, a key driver of growth, for this year, compared to expansion of 5.4% in 2022.
The state planning body has continuously revised downward its predictions, from 3.2% in the first quarter, to 2.7% in the second quarter and 2.5% in the third quarter, following expansion of 2.6% last year.
The Pheu Thai government has been using the word “crisis” to describe the economy and justify its proposal to give away 500 billion baht in digital cash to 50 million Thais. It expects the programme to deliver a big consumption-led lift to the economy next year.