The U.S. Federal Reserve is poised to keep rates higher for longer after the International Monetary Fund (IMF) forecast that the elevated inflation will fall at a slower pace than expected as the Red Sea chaos compels shipping companies to re-route which will consequently increase ocean freight costs. Commodities rally will also contribute to the prolonged inflationary pressure despite signs of a cooling labor market. Meanwhile, China's economy shows signs of recovery, albeit at fragile state. The Chinese government's recent measures to stabilize and stimulate the markets have led to a rebound in Chinese and Hong Kong stock indices.
SET Senior Executive Vice President Soraphol Tulayasathien said that the Thai economic growth for the January-March quarter expanded 1.5 percent, surpassing the market forecast at 0.8 percent. The upbeat data was propelled by private consumption and tourism sector. The country’s inflation swung back to positive for the first time in May after dipping into negative territory for six consecutive months while the gradual pickup in exports was seen. Additionally, listed companies reported the first quarter performance, with overall revenue and net profit continuing to grow, underpinned by the increasing number of tourists. Benefiting sectors include hotels, aviation, rental spaces, retail, and telecommunications. More than half of the listed companies posted higher-than-expected net profits and this encouraged securities analysts to raise SET’s forward EPS from the level predicted at the end of last year while valuation of several sectors remains low compared with the historic average.
Key highlights for May
- At the end of May 2024, SET Index fell 1.6 percent from the previous month and 5.0 percent from the end of 2023 to close at 1,345.66 points. Investors are waiting for a clearer picture of the stimulus and supporting measures for stock market following the cabinet reshuffle.
- For the five months to May, industry groups that outpaced SET Index were Consumer Products, Agro & Food Industry, and Services.
- SET’s and Market for Alternative Investment (mai)’s average daily trading value in May 2024 rose from the preceding month to THB 45.61 billion (approx. USD 1.25 billion) but fell 17.6 percent over the same period a year before. Foreign investors sold Thai shares with a net THB 16.57 billion in the month as their trading ratio remained the highest among other types of investors for 25 consecutive months.
- In May 2024, there was a newly listed company on SET : Supreme Distribution pcl (SPREME) and another newly listed on mai : Lightup Total Solution pcl (LTS).
- The Thai stock exchange’s forward P/E ratio at the end of May 2024 was 14.4 times, above the Asian stock markets’ average of 12.2 times. The historical P/E ratio stood at 16.1 times, surpassing the Asian stock markets’ average of 15.5 times.
- Dividend yield ratio at the end of May 2024 was 3.48 percent, exceeding the Asian stock markets’ average of 3.18 percent.
Derivatives Market
- Thailand Futures Exchange (TFEX)’s daily trading volume in May 2024 averaged 393,053 contracts, down 14.5 percent from the previous month largely due to the decrease in trading volume of SET50 Index Futures and Single Stock Futures. For the first five months of 2024. TFEX’s daily trading volume dropped 21.6 percent over the same period last year to 429,791 contracts mainly due to the decline in trading volume of Single Stock Futures and SET50 Index Futures.
