Despite a 3.2% contraction of the Stock Exchange of Thailand (SET) index in the first two months of 2024, foreign funds flew back to the Thai bourse in February as investors lowered their expectations of the Federal Reserve's policy rate cut to only three times this year.
SET senior executive vice-president Soraphol Tulayasathien said foreign funds flew back to the Thai stock market in February, in line with other regional markets.
However, the National Economic and Social Development Council's growth forecast downgrade to 2.2-3.2% for 2024 hindered the stock market's prospects.
At the end of last month, the SET index grew 0.5% from the previous month to 1,370.67 points, moving in line with regional peers. However, the benchmark dropped 3.2% from the end of 2023.
"We are seeing tailwinds in terms of export growth, which is buoyed by the rebound in world trade and solid consumption growth on the back of the continuous recovery of the tourism sector. These encouraged analysts to start raising profit forecasts of companies engaged in relevant businesses and the prices of securities of these industry groups started to bounce back," he said.
Nonetheless, analysts still recommend investors put money into high dividend stocks for passive income amid local and global uncertainties. The returns of these high dividend-paying stocks continuously outpaced the SET index, while they are considered to be defensive stocks with lower beta than the market average, added Mr Soraphol.
In February, the combined average daily trading value of the SET and Market for Alternative Investment contracted 29.5% from a year earlier to 47.2 billion baht (about US$1.32 billion) and averaged 47.1 billion baht a day in the first two months.
Foreign investors were net buyers with 3.25 billion baht last month while they sold a net 27.6 billion baht during the period January through February. Their trading ratio was higher than any other type of investor for 22 consecutive months.
The Thai stock exchange's forward price-earnings (P/E) ratio was 14.3 times as of the end of February, above Asian stock markets' average of 12.9 times. The historical P/E ratio stood at 16.3 times, exceeding Asian stock markets' average of 15.3 times.
The dividend yield ratio was 3.31%, surpassing Asian stock markets' average of 3.19%.
Daily trading volume of the Thailand Futures Exchange (TFEX) averaged 393,850 contracts in February, down 2.6% month-on-month and fell 25.6% year-on-year in the first two months to 399,395 contracts.
Last year, SET-listed companies posted total sales of 17.2 trillion baht (about $496 billion), down 2.6% from a year earlier, as net profit declined 10.7% to 961 billion baht.
"Overall sales and net profits dropped, affected by the decline in prices of various commodities including oil, agricultural products and food as well as the rise in SG&A expenses, and interest rates which stayed at a high level," said SET senior executive vice-president Manpong Senanarong.
However, tourism-related sectors such as aviation, hotels, space rental, retail and telecommunications turned around and grew owing to government policies, he added.