Foreign Investors Return to Thai Stocks with Renewed Confidence
The Thai stock market is experiencing a significant and positive shift in sentiment, marked by a strong return of foreign investors in July. This influx of capital has pushed foreign investment to over 11 billion baht for the month, demonstrating renewed confidence in the Thai equity market. This trend proved resilient even amidst daily fluctuations; for example, on a day when the SET Index saw a drop, foreign investors still registered a net purchase of 1.82 billion baht alone. According to Sorrabhol Virameteekul of Kasikorn Securities, a key driver behind this positive trend is the 12% depreciation of the US dollar since the beginning of the year, which has encouraged capital to flow into Asian markets. However, the investment remains concentrated in specific sectors, with a clear focus on petrochemicals, banking, and high-dividend stocks, indicating a selective approach by investors.
Trade Negotiations as a Critical Market Catalyst
A critical factor influencing this recent influx of foreign capital is the ongoing trade negotiations between Thailand and the United States. Analysts, including Weerawat Virojphoka of Finansia Syrus Securities, believe that investor optimism about a potential trade agreement is a primary driver behind the continued fund inflow. The market is watching these talks closely, as a successful deal could act as a significant catalyst, leading to a sustained period of capital inflow and potentially propelling the SET Index toward the 1,275-point level. Conversely, a failure to reach an agreement could quickly reverse the current positive momentum. This underscores the delicate nature of the market’s current upward trajectory, which is heavily reliant on the outcome of these high-stakes trade discussions. The anticipation of a favorable resolution is clearly playing a major role in shaping investor behavior.
Positive Outlook and Potential Market Drivers
Looking ahead, the positive sentiment surrounding Thai equities is expected to continue into the second half of the year. Therdsak Thaveeteeratham of Asia Plus Securities anticipates sustained foreign fund flow, citing the current “cheap” valuation of Thai stocks as a major attraction for international investors. He also notes that several negative factors that previously pressured the market, such as the Middle East conflict, have temporarily eased. The ongoing negotiations with the U.S. regarding import taxes are another key factor; a potential reduction from the current 36% could lead to a positive market adjustment. The market could also be boosted by the possibility of 1-2 more interest rate cuts by the central bank and the introduction of new fiscal stimulus measures, both of which are being considered for the latter half of the year.
