When the SET index rebounded by about 1% last Friday to finish above 1,200 points after the bourse discussed a series of measures following talks with the Finance Ministry to revive investor confidence, some market observers expected the gains might extend into the upcoming weeks.
But their hopes of a market recovery were dashed when the Stock Exchange of Thailand index fell into negative territory on March 10, losing more than 2% to finish at a five-year low of 1,177.44 points.
The loss was extended by another 0.6% to 1,169.99 points as of midday on Tuesday.
The decline partially reflects the government's failure to improve the outlook for the economy, as Prime Minister Paetongtarn Shinawatra has implemented stimulus measures worth 150 billion baht aiming to lift economic growth to more than 3%, its target for this year.
Wikij Tirawannarat, senior vice-president of Bualuang Securities, said another factor is heightened concerns regarding the US and Chinese economies.
Investors are worried the trade war stemming from US President Donald Trump's tariff policies could affect Thai GDP, deepening the decline of listed Thai companies' earnings, according to Mr Wikij.
In his view, the SET index could bottom out at 1,100-1,150 points if "no other major measures are imposed".
Suchot Tirawannarat, head of research at KGI Securities (Thailand), said the recently announced third phase of the digital wallet scheme for 2.7 million teenagers clearly indicates the government has a limited fiscal budget.
Last Friday KGI trimmed its GDP growth forecast to 2.6% this year from 2.8%, amid downgrades for private consumption and exports.
"Investors are now talking about a potential US recession following Trump's comment that he may be fine with overlooking short-term weakness in the economy to achieve his tariffs agenda," said Mr Suchot.
Global banks such as Goldman Sachs and Morgan Stanley are also reducing their US GDP forecasts this year.
New hope?
Among the measures the SET is working on is the Thailand Individual Saving Account (TISA), which offers tax incentives for those holding units until retirement, expected to be launched in 3-4 months.
TISA is modelled on Japan's Nippon Individual Savings Account, which caused the Nikkei to rally 28% in 2023.
The bourse also proposed to the Finance Ministry an omnibus law for capital market reforms, including proposals to encourage undervalued stocks to submit growth plans for tax incentives, as well as removing the 10% capital limit restriction for treasury stock buybacks.
The ministry is also considering a temporary incentive for Thai ESG funds, raising the tax deduction limit from 300,000 to 600,000, which could propel big-cap stocks.
Chavinda Hanratanakool, chair‑ woman of the Association of Investment Management Companies, said she believes the recently announced measures could create more confidence in the Thai capital market and profits of listed companies will recover this year.
The state-controlled Vayupak Fund 1 still has tens of billions of baht to invest in Thai stocks, given the right timing, said Ms Chavinda.
"Although the SET index has been more volatile than other markets this year because of domestic factors, the Thai stock market is still worth investing in and will adjust upwards," she said.
Pakavat Pisuthipan, head of securities at CGS International Securities (Thailand), said while TISA could support the Thai stock market, it would take at least two months for the new liquidity to be injected under this programme.
"The selling pressure in the SET has lessened, but there is no new buying of Thai stocks, causing the index to stagnate," he said.
Earlier this week CGS cut its market earnings per share (EPS) forecast by 2% this year and 1.6% next year.
The brokerage projects aggregate core EPS increasing by 16% to 91.5 baht this year and 8% to 98.7 baht in 2026.