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Business Times
a day ago
- Business
- Business Times
Thai stocks may fall to Covid lows amid political crisis: analyst
[SINGAPORE] Thailand's stock market cannot catch a break – the fallout from a major political crisis may further rock the worst-performing market in the world this year. Amid the existing headwinds from tariff uncertainty and the faltering tourism revenue, the Stock Exchange of Thailand's (SET) benchmark index has already wilted 23.8 per cent since the start of the year as at Friday (Jun 20), placing it last among all global equity indices, according to Bloomberg data. The market sell-off intensified in recent days as political jitters flared, following a leaked phone call between officials in Bangkok and Phnom Penh which heightened tensions along the Cambodian border. With economic headwinds already pressuring sentiment, analysts warn the bloodbath on the bourse may not yet be over. 'If foreign fund outflows accelerate and the prime minister faces calls to resign or a no-confidence vote, the SET Index could test 2020 Covid lows,' said Manish Bhargava, chief executive at Straits Investment Management. The index had fallen to a low of 969.1 points in March 2020, a level not seen since late-2011. Thailand's stock exchange was the worst-performing bourse in Asean on Thursday, with the SET Index plunging 2.4 per cent to 1068.7 – its sharpest drop this year – after the call was leaked on Wednesday. While other regional markets also posted losses, they did not match the scale of the Thai sell-off, underscoring growing investor unease as the kingdom faces domestic instability and macro headwinds. The losses came as a leaked phone call between Thai Prime Minister Paetongtarn Shinawatra and former Cambodian prime minister Hun Sen on Wednesday incited the Bhumjaithai Party (BJT) to announce its exit from the ruling coalition government. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up BJT's withdrawal leaves the ruling coalition, led by Paetongtarn's Pheu Thai Party, with a slim majority by just 18 seats. As calls for her resignation escalate and other coalition partners threaten to withdraw, uncertainty has arisen over the possibility of a Cabinet reshuffle, or a snap election that may lead to a political stalemate. This could mean a three to six-month wait for a new government to take office, said CGS International (CGSI) analyst Kasem Prunratanamala in a note on Wednesday night. 'We believe that it would be difficult for the SET to perform during this period.' Bhargava noted: 'Key sectors that are sensitive to political stability – banks, infrastructure and utilities – will likely lead declines.' Others, however, remained optimistic. OCBC Asean economists Lavanya Venkateswaran and Jonathan Ng maintained a baseline scenario of the political situation staying contained in a note on Jun 18, citing Paetongtarn's reconciliatory tone. The SET Index closed lower on Friday at 1067.6 points, falling 0.1 per cent. Tourist slump A slump in tourist arrivals to Thailand has reverberated through its economy, with the sector accounting for around 12 per cent of gross domestic product and employing more than 20 per cent of workers in 2024, according to the Bank of Thailand (BOT). Foreign tourist arrivals to the country dipped 11 per cent in May from the previous month, continuing what has been a slow start to the year for the industry. The 14.3 million tourist arrivals during the first five months of 2025 were down 2.7 per cent from the previous corresponding period last year, and brought in 1.9 per cent less revenue at about 668.4 billion baht (S$26.2 billion), according to a Bank of America note. The bourse's tourism sector, comprising stocks including spa operator Siam Wellness Group and hotel operators Central Plaza Hotel and Erawan Group, has fallen about 23.4 per cent since the start of the year. But hopes of a sector-wide revival have also led some analysts to look with more optimism at stocks that have been battered hard by the slump. 'The tourism sector has already priced in the bad news,' UOB said in a Jun 5 note, naming stocks such as Erawan Group and mall operator Central Pattana as rebound plays. 'We expect tourist arrivals to recover in the third quarter of 2025,' said UOB analysts Kitpon Praipaisarnkit and Krit Tanarattananon. Yet while the tourism sector's dips may have bottomed out, CGSI analyst Thanapol Jiratanakij does not foresee a 'swift recovery' in arrivals – largely owing to the declining popularity of the nation among Chinese tourists. Increasing safety concerns from incidents such as the abduction of a Chinese actor in January and an earthquake in March have put off some Chinese nationals, who have turned towards domestic tourism and other regional alternatives for leisure travel. Existing headwinds to tourist arrivals have also hit the country's retail sector, highlighted by unlisted retailer King Power's request to terminate its duty-free concession contracts with Airports of Thailand. Maybank had earlier downgraded the broader retail sector to neutral, with companies such as department store operator Central Retail receiving 'hold' ratings. The bank cited sector-wide headwinds in muted consumption, falling tourist arrivals and a subdued economic outlook. 'Restoring confidence among Chinese tourists will require real improvements in safety and perception,' CGSI's Thanapol said. 'In this regard, we believe the government still has considerable work to do.' But as Paetongtarn's leadership remains uncertain, such efforts to boost the domestic economy may no longer be on the cards. 'The timing could not be more inconvenient considering (the) external headwinds,' said OCBC's Venkateswaran and Ng. As observers await the BOT's policy decision on Jun 25, ANZ Asia economist Krystal Tan expects the central bank to hold its benchmark rate at 1.75 per cent until the fourth quarter – but a worsening political gridlock may force the BOT into a rate cut. This may provide a catalyst to Thai stocks amid the wavering political situation, said CGSI's Kasem. He maintained the index's target at 1,200 points, citing its relative undervaluation to its peers.
Business Times
a day ago
- Business
- Business Times
Thai stocks may fall to Covid lows amid political crisis: analysts
[SINGAPORE] Thailand's stock market cannot catch a break – the fallout from a major political crisis may further rock the worst-performing market in the world this year. Amid the existing headwinds from tariff uncertainty and the faltering tourism revenue, the Stock Exchange of Thailand's (SET) benchmark index has already wilted 23.8 per cent since the start of the year as at Friday (Jun 20), placing it last among all global equity indices, according to Bloomberg data. The market sell-off intensified in recent days as political jitters flared, following a leaked phone call between officials in Bangkok and Phnom Penh which heightened tensions along the Cambodian border. With economic headwinds already pressuring sentiment, analysts warn the bloodbath on the bourse may not yet be over. 'If foreign fund outflows accelerate and the prime minister faces calls to resign or a no-confidence vote, the SET Index could test 2020 Covid lows,' said Manish Bhargava, chief executive at Straits Investment Management. The index had fallen to a low of 969.1 points in March 2020, a level not seen since late-2011. Thailand's stock exchange was the worst-performing bourse in Asean on Thursday, with the SET Index plunging 2.4 per cent to 1068.7 – its sharpest drop this year – after the call was leaked on Wednesday. While other regional markets also posted losses, they did not match the scale of the Thai sell-off, underscoring growing investor unease as the kingdom faces domestic instability and macro headwinds. The losses came as a leaked phone call between Thai Prime Minister Paetongtarn Shinawatra and former Cambodian prime minister Hun Sen on Wednesday incited the Bhumjaithai Party (BJT) to announce its exit from the ruling coalition government. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up BJT's withdrawal leaves the ruling coalition, led by Paetongtarn's Pheu Thai Party, with a slim majority by just 18 seats. As calls for her resignation escalate and other coalition partners threaten to withdraw, uncertainty has arisen over the possibility of a Cabinet reshuffle, or a snap election that may lead to a political stalemate. This could mean a three to six-month wait for a new government to take office, said CGS International (CGSI) analyst Kasem Prunratanamala in a note on Wednesday night. 'We believe that it would be difficult for the SET to perform during this period.' Bhargava noted: 'Key sectors that are sensitive to political stability – banks, infrastructure and utilities – will likely lead declines.' Others, however, remained optimistic. OCBC Asean economists Lavanya Venkateswaran and Jonathan Ng maintained a baseline scenario of the political situation staying contained in a note on Jun 18, citing Paetongtarn's reconciliatory tone. The SET Index closed lower on Friday at 1067.6 points, falling 0.1 per cent. Tourist slump A slump in tourist arrivals to Thailand has reverberated through its economy, with the sector accounting for around 12 per cent of gross domestic product and employing more than 20 per cent of workers in 2024, according to the Bank of Thailand (BOT). Foreign tourist arrivals to the country dipped 11 per cent in May from the previous month, continuing what has been a slow start to the year for the industry. The 14.3 million tourist arrivals during the first five months of 2025 were down 2.7 per cent from the previous corresponding period last year, and brought in 1.9 per cent less revenue at about 668.4 billion baht (S$26.2 billion), according to a Bank of America note. The bourse's tourism sector, comprising stocks including spa operator Siam Wellness Group and hotel operators Central Plaza Hotel and Erawan Group, has fallen about 23.4 per cent since the start of the year. But hopes of a sector-wide revival have also led some analysts to look with more optimism at stocks that have been battered hard by the slump. 'The tourism sector has already priced in the bad news,' UOB said in a Jun 5 note, naming stocks such as Erawan Group and mall operator Central Pattana as rebound plays. 'We expect tourist arrivals to recover in the third quarter of 2025,' said UOB analysts Kitpon Praipaisarnkit and Krit Tanarattananon. Yet while the tourism sector's dips may have bottomed out, CGSI analyst Thanapol Jiratanakij does not foresee a 'swift recovery' in arrivals – largely owing to the declining popularity of the nation among Chinese tourists. Increasing safety concerns from incidents such as the abduction of a Chinese actor in January and an earthquake in March have put off some Chinese nationals, who have turned towards domestic tourism and other regional alternatives for leisure travel. Existing headwinds to tourist arrivals have also hit the country's retail sector, highlighted by unlisted retailer King Power's request to terminate its duty-free concession contracts with Airports of Thailand. Maybank had earlier downgraded the broader retail sector to neutral, with companies such as department store operator Central Retail receiving 'hold' ratings. The bank cited sector-wide headwinds in muted consumption, falling tourist arrivals and a subdued economic outlook. 'Restoring confidence among Chinese tourists will require real improvements in safety and perception,' CGSI's Thanapol said. 'In this regard, we believe the government still has considerable work to do.' But as Paetongtarn's leadership remains uncertain, such efforts to boost the domestic economy may no longer be on the cards. 'The timing could not be more inconvenient considering (the) external headwinds,' said OCBC's Venkateswaran and Ng. As observers await the BOT's policy decision on Jun 25, ANZ Asia economist Krystal Tan expects the central bank to hold its benchmark rate at 1.75 per cent until the fourth quarter – but a worsening political gridlock may force the BOT into a rate cut. This may provide a catalyst to Thai stocks amid the wavering political situation, said CGSI's Kasem. He maintained the index's target at 1,200 points, citing its relative undervaluation to its peers.
The Star
27-05-2025
- Business
- The Star
Thai DPM Pichai courts global funds to reignite stock market, eyes investment reforms
BANGKOK: Deputy Prime Minister and Finance Minister Pichai Chunhavajira (pic) revealed that the Thai government is in talks with major international investment funds to attract more capital into the Thai stock market, particularly as the SET Index lingers at the 1,100–1,200 level, which he said is increasingly appealing to investors. Speaking during a keynote address at the Daily News Talk 2025 seminar, themed 'The Charm of Thai Stocks: Driving the Economy,' Pichai noted that large institutional investors, many of whom have historically allocated significant portfolios to Thailand, have shifted more capital overseas in recent years. However, these funds still maintain investments worth hundreds of billions of baht in Thailand—mainly in government bonds. Although returns from foreign investments have been solid, recent volatility in global markets has prompted investors to reassess. Pichai said investors are starting to see that Thai stocks have declined significantly, and are re-evaluating asset allocations and regulatory conditions that could support a return to Thai equities. Pichai assured that the government is prepared to revise regulations to make the Thai capital market more attractive. This includes restoring investor confidence and reforming capital market laws, such as the soon-to-be-enforced Securities Oversight Act, which will impose civil and criminal penalties for naked short selling. These legal changes, he said, are part of broader efforts to strengthen the Thai economy and position it for long-term growth, while large corporations have suggested aligning structural reforms with global trends, such as green economy and ESG practices. 'I have spoken with several funds about new investment policies. With the Thai stock index at this level, many see an opportunity. Thai equities still have appeal, especially for those who understand the fundamentals,' Pichai said. 'Thailand is viewed as a safe haven—but most investors are in a 'wait-and-see' mode. They have not left; they are watching what we do next.' When asked about the relatively slow shift from long-term equity funds (LTFs) to the new Thai ESGX funds, Pichai acknowledged that investors are still highly liquid and likely weighing the right timing for reallocation. On the strong baht, Phichai attributed the currency's rise to recent capital inflows, though he cautioned that much of it may be short-term investment in bonds, rather than equities, which are more sensitive to economic sentiment and structural reforms. 'Bond investments offer immediate returns and safety, unlike equities which require more confidence in Thailand's short- and long-term economic strategy,' he explained, adding that fund allocations could shift to equities once economic conditions improve. Regarding broader investment incentives, Pichai noted that foreign investors are showing increasing interest in relocating production to Thailand. The government is working to support domestic manufacturing and employment, while upgrading workforce training—with a particular focus on linking labor to research sectors. On land use reform, the government is currently amending laws to allow long-term leases of state land for up to 99 years—returning ownership to the state at term's end—rather than requiring investors to buy land through the BOI (Board of Investment). These efforts will be paired with enhanced access to utilities such as water and electricity. On the use of cryptocurrency for retail payments, Pichai clarified that the discussion focuses on enabling crypto transactions via credit cards accepted by merchants—not tied to domestic currency. This model is under consideration by the Bank of Thailand, referencing global practices in crypto-based payment systems. - The Nation/ANN
Business Times
23-05-2025
- Business
- Business Times
Political uncertainty and global headwinds could weigh on Thai market: CGSI
[SINGAPORE] Thailand's stock market is likely to face continued pressure from political uncertainty and global economic headwinds, CGS International (CSGI) said. Kasem Prunratanamala, the chartered financial analyst of CGSI Thailand research team, noted on Wednesday (May 21) that the aggregate net profit of Thai corporations under their coverage remained flat year on year in Q1 2025. Quarter on quarter, however, there was a strong 40 per cent rise. The sectors with the most significant quarter-on-quarter net profit growth included electronics, construction, food and telecommunications. The sectors that delivered the weakest quarter-on-quarter growth included hotels, consumer and property. Several Thai companies, particularly those in banking, construction, and oil and gas, exceeded expectations with their Q1 earnings. Conversely, the service and transportation sectors reported results that fell short of forecasts. Prunratanamala cautioned, however, that political instability could hinder the government's effectiveness, especially amid a challenging economic environment. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Thailand faces a 36 per cent US tariff if a reduction cannot be negotiated with Washington before a moratorium expires in July. The US has set a 10 per cent tariff for most nations while the moratorium is in place. Tensions between Thailand's ruling Pheu Thai Party and its coalition partner Bhum Jai Thai (BJT) have intensified on the back of disputes over key policies such as cannabis legalisation and minimum wages. The continued tit-for-tat between the parties can undermine the unity and may affect the coalition's long-term stability, the analyst noted. He added: 'A worst-case scenario for Thai politics now is a house dissolution, with a six-month limbo period before a new government takes office. 'Even so, we believe an interim government will not be able to do its job as the conflict between the two parties is likely to prolong,' said Prunratanamala. He added that a second-worst case scenario would be BJT's expulsion from the coalition, which would result in a major Cabinet reshuffle. As BJT is widely believed to have influence over most of the senators, CSGI believes that it will be difficult for any major government Bills to pass through parliament under the current political environment. After a roughly 10 per cent rebound from recent lows – driven by hopes of easing global trade tensions – CSGI believes the Stock Exchange of Thailand (SET) is now fairly valued at around 12 times its 12-month forward price-to-earnings (PE) ratio. However, ongoing political tensions between the Pheu Thai and BJT parties are likely to keep market sentiment weak, said Prunratanamala. As a result, CGSI has reaffirmed its SET Index target of 1,200 points, based on a projected FY2026 P/E ratio of 13.4 – one standard deviation below the 10-year average. In terms of investment strategy, CSGI is turning more defensive. 'We prefer domestic-focused, high-yield stocks,' Prunratanamala said. CSGI has removed Berli Jucker Public Company, Minor International Public Company, and Carabao Group from its top picks, and added The Erawan Group and Gulf Development. On the upside, Prunratanamala added that potential Bank of Thailand rate cuts and government stimulus could help support the market if implemented.
Malaysian Reserve
19-05-2025
- Business
- Malaysian Reserve
Thailand slashes growth forecast on impact of trade war
THAILAND significantly lowered its forecast for economic growth this year as the global trade war undercuts private investment and exports, adding to already-weak consumption at home. Gross domestic product will likely grow 1.3% to 2.3% in 2025, the National Economic and Social Development Council said on Monday. The latest forecast is a full percentage point lower than the previous estimate of 2.3% to 3.3% and more or less aligns it with that of the Bank of Thailand, the World Bank and the International Monetary Fund. Following the dire outlook, the government decided to put on hold a planned cash handout program and instead use about 157 billion baht ($4.8 billion) budgeted for it to support projects which will generate more jobs and boost competitiveness of the local industries. If the full-year GDP outturn comes in at the midpoint, it would be Thailand's weakest print since the pandemic, according to Bloomberg-compiled data. It could take around two years for the economy to recover from the impact of a threatened 36% US tariff and a global trade slowdown, NESDC chief Danucha Pichayanan said at a briefing in Bangkok. 'Economic growth remains constrained by high household and corporate debt burdens and it is expected the growth to be softened in the second half of the year, following the global economic and trade slowdown and the impact of trade protection measures,' it said in a statement. The benchmark SET Index fell 0.7% to its lowest close since April 29. The baht, which pared gains after the release of the data, was 0.9% higher at 33.07 to a dollar by 4:30 p.m. local time. Southeast Asia's second-largest economy is bracing for the possibility of a 36% tariff in the US, its largest export market. Thailand is waiting to start negotiations with Washington to bring down the levies. 'The negotiation results will dictate the Thai economic outlook going forward,' Danucha said. 'If the situation remains relaxed like this, our economy should continue to grow without problem. If not, the situation will change.' Exports will likely grow just 1.8% this year, down from the previous estimate of 3.5% and the 5.8% in notched 2024. Machinery and electronics are Thai exports at risk of losing market share in the US market from the higher tariffs, Danucha said. Private investment is projected to decline 0.7% in 2025, in line with the exports slowdown. Private consumption, which accounts for the bulk of Thai GDP, is seen growing just 2.4%, down from the previous estimate of 3.3% and the 4.4% in 2024. Government stimulus should boost public consumption and investment, NESDC said. While Thailand's economy grew at a faster-than-expected pace last quarter, it was largely driven by a surge in exports as businesses front-loaded orders in a bid to avoid the Trump tariffs. 'The trade situation and foreign exchange may be more volatile and the economy may slow down going forward,' with the impact more clear in the third quarter, Danucha said. He warned businesses and consumers to brace for the risks and be cautious with their spending. GDP in the January-March period rose 3.1% from a year earlier, beating the 2.9% median estimate in a Bloomberg News survey and comparing to the revised 3.3% pace notched in previous three months. The economy expanded 0.7% quarter-on-quarter, compared with a median estimate for 0.5% growth. A global trade war would exacerbate Thailand's already sluggish recovery post-pandemic, with local consumption remaining tepid despite cash handouts, and China's slowdown hitting the tourism sector. NESDC cut its forecast for tourist arrivals this year to 37 million from 38 million. Prime Minister Paetongtarn Shinawatra has pledged new stimulus measures, but they may come at the cost of bloating still-elevated government debt levels. Moody's Ratings lowered Thailand's credit rating outlook to negative from stable last month as the trade war weighs on its economic and fiscal strength. The prime minister said some programs are being reviewed in view of an expected shortfall in revenue as the trade war is affecting all countries. New government-initiated projects may help boost growth between 0.7 to 1 percentage point, Finance Minister Pichai Chunhavajira told reporters. The Bank of Thailand also has 'very limited ammunition' after 75-basis points in cuts brought its benchmark key interest rate to 1.75%, Governor Sethaput Suthiwartnarueput said earlier this month. The central bank has warned that GDP growth this year could fall to as low as 1.3% — the slowest pace since the pandemic — in case of a severe trade war and higher US levies. –BLOOMBERG
