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Progress of U.S. debt ceiling negotiations eased investor concerns while the Federal Open Market Committee (FOMC)’s meeting signaled that rate pause is on the cards. These positive factors bolster global sentiment as investors forecast that financial costs will marginally increase from the current level. Given that the Thai economy is bounding back and risk of inflation is limited, the Bank of Thailand is expected to keep the gradual pace of rate hike.
Senior Executive Vice President of The Stock Exchange of Thailand (SET) Soraphol Tulayasathien said that fund outflows from Thai bond and equity markets which started to be seen in May is expected to be short-lived following the election results as investors are concerned about the formation of the new government and the change in 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. Moreover, SET’s forward price to earnings ratio (P/E) was still below the average in the past and this encouraged individual and local institutional investors to buy with a net position for the January-to-May period.
Key highlights for May
- At the end of May 2023, the SET Index rose 0.3 percent from the previous month and decreased 8.1 percent from the end of 2022 to close at 1,533.54 points, in line with other market indices in ASEAN.
- At the end of May 2023, industry groups that outperformed SET index when compared with the end of last year comprised Technology, Consumer Products, Financials, Services, and Property and Construction.
- In May 2023, SET’s and Market for Alternative Investment (mai)’s average daily trading value dropped 31.6 percent from the same period a year before to THB 54.19 billion (approx. USD 1.58 billion). Both markets’ trading volume averaged THB 60.93 billion a day for the first five months of 2023. Foreign investors were net sellers for the fourth straight month to a tune of THB 33.41 billion in May. However, their trading ratio remained higher than any other types of investors for 13 straight months.
- In May, there was one newly-listed company on SET: G-Able pcl (GABLE).
- The Thai stock exchange’s forward P/E ratio at the end of May 2023 was 16.1 times, above the Asian stock market’s average of 12.5 times. The historical P/E ratio stood at 20.8 times, exceeding the Asian stock market’s average of 14.1 times.
- Dividend yield ratio at the end of May 2023 was 3.17 percent, below the Asian stock market’s average of 3.46 percent.
Derivatives market
- Thailand Futures Exchange (TFEX)’s daily trading volume in May averaged 501,638 contracts, up 19.3 percent from the previous month largely due to the increase in trading volume of SET50 Index Futures and Single Stock Futures. For the first five months of 2023, TFEX’s daily trading volume dropped 3.1 percent over the same period last year to 548,016 contracts, mainly due to the lower trading volume of Single Stock Futures.
