The Thai stock market has soared the highest in Asia this month-to-date, rising 6% in dollar terms, with foreign investors returning to become net buyers of more than 20 billion baht, supported by both domestic and external factors, says the Stock Exchange of Thailand (SET).
While the South Korean and Chinese bourses have posted negative returns this year, the SET's return in dollar terms was around 11% over a one-month period and 2.1% year-to-date. In the local currency, the Thai bourse generated a return of 1.1%.
The average trading value of the SET and Market for Alternative Investment was 65.2 billion baht from Sept 1-9, compared with 46.0 billion last month.
The SET was helped by a clearer domestic political landscape following the parliamentary vote for a new prime minister, stronger than expected economic growth and listed companies' robust second-quarter earnings, said Soraphol Tulayasathien, senior executive vice-president of the SET.
External support includes a likely Federal Reserve rate cut at its meeting later this month, he said. Speaking at the annual Jackson Hole Economic Symposium in late August, Fed chair Jerome Powell expressed confidence that inflation is within reach of the US central bank's 2% target, with rate cuts on the horizon.
"As a result, capital flows are likely to shift towards equities and bonds in emerging markets with strong fundamentals, and a correction on Wall Street appears increasingly imminent following the recent upsurge," said Mr Soraphol.
Analysts project increased fund flows for the rest of the year, supported by tax incentives for investments in the Thailand ESG Fund and a clear launch path for the Vayupak Fund, which features a minimum return guarantee.
"These favourable factors are expected to attract investor interest and strengthen confidence in the Thai capital market," he said.
Listed companies have consistently adopted share buybacks as a tool for financial liquidity management.
Treasury stock activities reflect confidence among company executives that the current share prices remain below their intrinsic value, prompting buying demand from investors, said Mr Soraphol.
At the end of August, the SET index finished at 1,359.07 points, up 2.9% from the previous month, moving in line with other regional indices. As a consequence, the benchmark index pared its loss to a mere 4% from the end of 2023.
For the first eight months this year, the average daily trading value for the Thai bourse dropped 22.2% year-on-year to 44.4 billion baht.
The SET's forward price-to-earnings (P/E) ratio at the end of August was 14.9 times, above the average for Asian markets at 12.9 times. The historical P/E ratio is 16.4 times, exceeding the average for Asian bourses of 15.1 times. The dividend yield ratio for the SET at the end of August was 3.5%, higher than the average for Asian markets at 3.16%.