The 30-minute extension of the Stock Exchange of Thailand's (SET) trading hours and the possibility that the Bank of Thailand will start cutting interest rates next month failed to boost the Thai market on Monday as investors worried about a possible backlash to an early rate cut and the consequences of Friday's terrorist attack on the outskirts of Moscow.
Starting on Monday, the SET extended trading hours from 270 minutes to 300 minutes per day by starting the afternoon session for both the main bourse and the Market for Alternative Investment 30 minutes earlier at 1.30pm.
Thailand's stock trading window has now been expanded to five hours a day from four-and-a-half, close to other regional markets, which operate for 6-7 hours a day, according to Asia Plus Securities (ASPS).
The SET index, however, fell by 0.36% by midday. The loss extended in the afternoon session before the Thai index finished the session 0.62% lower on Monday.
"Although trading hours have been extended by 11.1%, there are no fundamental drivers," ASPS said in its research on Monday.
"Longer trading hours should boost liquidity. Still, we expect the SET index to not rally until the trading value is higher than 50 billion baht per day, turnover is above 70%, or the interest rate is cut," it added.
Generally, a 0.25% interest rate cut boosts trading value by 3-4 billion baht, the brokerage noted.
"Monday's trading also realised negative impacts of geopolitics given reports that Russia is preparing to mobilise 100,000 soldiers to attack Ukraine which put pressure on investment conditions around the world," said ASPS executive vice-president Therdsak Thaveeteeratham.
Kitpon Praipaisarnkit, vice-president of UOB Kay Hian Securities Thailand PC, shared a similar view, noting that trading volume in recent days suggested that investors lack confidence given the risks in monetary policy.
The gap between US and Thai interest rates has weakened the baht and could potentially drive more foreign outflows, said Mr Kitpon.
Thai economic growth, meanwhile, is lower than that of neighbouring countries, causing foreign funds to flow out to other stock markets in the region, he added.
Kasem Prunratanamala, head of equity research at CGS International Securities (Thailand), said investors are now seeing greater possibilities that the Bank of Thailand's Monetary Policy Committee would start cutting rates at its meeting on April 10.