Thailand's stock exchange is emerging as an attractive investment destination due to its low volatility, while uncertainties surrounding US President Donald Trump's policies could prompt the US Federal Reserve (Fed) to move towards monetary easing sooner than anticipated, benefiting emerging markets such as Thailand, the local bourse said yesterday.
Soraphol Tulayasathien, senior executive vice-president of the Stock Exchange of Thailand (SET), said Trump's inaugural address for his second presidency reverberated through both the US and international markets. In the aftermath, US Treasury yields moved higher as the dollar extended its rally.
The International Monetary Fund (IMF) forecast stronger US economic growth while cautioning that dramatic policy shifts could create headwinds for other economies and complicate monetary easing efforts by central banks worldwide.
"Given the policy uncertainties, the Fed may move towards monetary easing sooner than anticipated. This scenario could catalyse capital outflows from the US market to emerging economies," Mr Soraphol noted.
The Thai stock market's additional strength is the consistently strong dividend yield, with Thai stocks maintaining an average yield of 3.14% since 2000 to date.
"The Thai stock market thus positions itself as a compelling safe haven for investors pursuing defensive portfolio diversification."
At the end of last month, the SET index fell by 6.1% to close at 1,314.50 points. Compared to the end of 2024, industry groups that outperformed the overall index were financials and energy.
The SET's and Market for Alternative Investment's average daily trading value fell 17.2% year-on-year in January to 39.01 billion baht (roughly US$1.16 billion). However, the proportion of trading by local institutional investors demonstrated an upward trend, staying above 10% of total trading value for four consecutive months.
SET president Asadej Kongsiri said the SET is closely monitoring a decline in market sentiment caused by external factors such as the trade war, interest rate cuts and heavy selling of long-term equity funds (LTFs) which exceeded 10 billion baht in January,
The SET is working with related agencies to address the issue, he said.
Mr Soraphol said while short-term foreign investors had net sales of 146.9 billion baht in 2024, they still hold 33.8% of long-term investment in Thai stocks worth 5.8 trillion baht.
Despite Thai stocks being among the worst-performing globally, the market nominal yield remains the highest in the region at 3.6% now, up from 3.2% at the end of 2024.
The bank and finance sectors have earnings that outperformed the overall market. Defensive stocks, particularly in healthcare and high-dividend sectors, continue to attract investors, said Mr Soraphol.
The Thai stock exchange's forward price-earnings (P/E) ratio at the end of January was 15 times, above the Asian stock market's average of 12.6 times. The historical P/E ratio stood at 17.7 times, exceeding the Asian stock market's average of 14.2 times.
Dividend yield ratio at the end of January was 3.64%, higher than Asian stock markets' average of 3.28%.
Thailand Futures Exchange's daily trading volume in January averaged 391,493 contracts, down 27.3% from the previous month, largely due to the higher trading volume of Single Stock Futures and SET50 Index Futures. The YTD average daily trading volume in 2025 dropped 27.3% to 391,493 contracts, mainly due to the decline in trading volume of Single Stock Futures and SET50 Index Futures.