The Stock Exchange of Thailand (SET) has been seeing signs of a return of foreign fund inflows to the Thai stock market in the second half of 2024, supported by the anticipated US Federal Reserve interest rate cut, the rebounding Thai economy, and the financial results of listed companies.
Senior executive vice-president Soraphol Tulayasathien said developing countries are showing promising signs of rising production capacity for exports, indicating the global economic recovery is gaining momentum.
Moreover, several major central banks have slashed their policy rates after three years of monetary policy tightening as global disinflation is now back on track and nearing the target, he said.
"Investors remain cautious, awaiting clarity on government economic stimulus measures and assessing the impact of capital market confidence-boosting measures announced in late June," said Mr Soraphol.
The SET index closed at 1,300.96 points in June, down 3.3% from the previous month and 8.1% from the end of 2023.
Average daily trading value stood at 45.2 billion baht (US$1.24 billion), down 22.9% over the first six months of this year when compared with the corresponding period of 2023. Foreign investors maintained their dominant position in trading activity for the 26th consecutive month, though this was from a net sell position totalling roughly 116 billion baht.
New stock listings
Nonetheless, the Thai capital market continued to attract new listings, with six firms listing on the SET and 11 debuting on the Market for Alternative Investment, raising a combined 15.6 billion baht in the first half of 2024.
"Investors are eagerly awaiting the Fed's first rate cut later this year as historical data shows that the Fed's rate cuts have typically been a boon to emerging markets," said Mr Soraphol.
Meanwhile, Thailand's macroeconomic indicators signal continuous improvement, with exports and tourism performing better than expected.
"The benign imports for private sector production and the higher government spending on consumption and investment, following earlier budget delays, indicate a robust economic outlook in the second half."
The uptick rule was enforced at the beginning of this month to reduce daily short-selling volume and SET index volatility. In addition, the lockup period for investment in the Thai ESG fund has been shortened, bringing it closer to that of the former tax-deductible long-term equity fund.
This adjustment is expected to attract more domestic institutional investment, potentially boosting the SET index in the future, he noted.