Overseas Investors Sold Thai Stock Amid Political Uncertainty

In the initial five months of this year, overseas investors sold close to 100 billion baht in Thai stocks, with 33.4 billion baht offloaded solely in May, due to the escalation of global interest rates and uncertainty in the formation of the forthcoming government.

Nonetheless, the Stock Exchange of Thailand (SET) voiced its optimism on Tuesday, stating that the recent easing of the US debt limit could improve worldwide sentiment, encouraging investors to buy more Thai shares, spurred by the recovering Thai economy.

Senior executive vice-president of SET, Soraphol Tulayasathien, conveyed that the post-May 14 election outflows from the nation’s bond and equity markets are anticipated to be temporary.

This is given the investors’ concerns about the constitution of a new government and potential alterations in the economic policy.

“Investors are closely monitoring the situation and analysts are optimistic that foreign fund flows will be reversed if the new government policies do not affect the country’s competitiveness and push operating costs higher,” he pointed out.

In addition, the forward price to earnings ratio (P/E) of SET lingered beneath the historical mean, thereby motivating individual and local institutional investors to take a net position during the January-May period.

Mr Soraphol mentioned, “The factor to be monitored is the reduction of the Organisation of Petroleum Exporting Countries’ (Opec) output that it might increase the pressure on the economy and investment sentiment again.”

As of May’s end, the SET index demonstrated a 0.3% rise from the preceding month and an 8.1% decline from 2022’s end, culminating at 1,533.54 points, aligning with other Asean market indices.

Among industry sectors, technology, consumer products, financials, services, and property and construction outpaced the SET, relative to 2022’s conclusion.

The average daily trading value for SET and the Market for Alternative Investment plummeted 31.6% from the corresponding period of the previous year to 54.1 billion baht (approximately US$1.58 billion).

During the first five months, the trading volume averaged 60.9 billion baht per day across both markets. Foreign investors were the net sellers for the fourth consecutive month in May, offloading 33.4 billion baht.

Yet, their trading ratio persistently outstripped other investor categories for the 13th consecutive month.

The forward P/E ratio of the Thai stock exchange was 16.1 times, outdoing the average of Asian stock markets at 12.5 times. The historical P/E ratio was 20.8 times, surpassing the Asian stock markets’ average of 14.1 times.

The dividend yield ratio stood at 3.17%, falling short of the average for Asian stock markets, which was 3.46%.