In the wake of a sizeable plunge of over 1.5% in the previous trading session, Thailand’s premier trading platform, the Stock Exchange of Thailand (SET), slipped beneath the critical threshold of 1,450 points. This unsettling occurrence surfaced on the heels of mounting anxieties regarding an escalating public deficit and a potential slump in economic growth. This pessimistic sentiment stirred after the World Bank revised its forecast for Thailand’s GDP growth in a downward trajectory.
Keen observers from Daol Securities (Thailand), indicating an intensifying selling pressure exerted by a gamut of investor groups, attributed the fears of an imminent interest rate hike by the Federal Reserve as a primary contributor. Concurrently, the Thai baht, reacting to the relentless surge in the yield on US bonds and the strength of the dollar, slumped to its lowest value in 11 months, falling beneath the threshold of 37 baht against the US dollar. This financial tremor, in turn, has dealt a blow to the economy, particularly the Thailand’s bourse, which is heavily dependent on its energy stocks. The latter saw a worrisome decline of over 2% in a parallel to the global fall in oil prices.
Suggesting a cautious investor sentiment, Daol Securities forewarned a projected persistent downturn in the SET index due to a conspicuous absence of favorable indicators in the Thai market of late. The financial behemoth added that an increasing investor predilection for holding cash rather than investing could cast a grim shadow over the fortunes of the stock market. Underlining further domestic concerns, the firm alluded to the alarming scale of household debt and the possibility of an upward revision of the public debt ceiling.
The World Bank, in its recent revision of the Thai GDP forecast for the year 2023, downgraded it from 3.6% to 3.4%. Additionally, the international agency also revised its outlook for 2024 from 3.7% to 3.5%, laying the blame on a predicted slowdown in exports and the intensifying public debt that could put a strain on public and private investment, according to a report in the Bangkok Post.
On a separate note, Turkey has announced its plans to lift the six-month embargo on the oil pipeline from Iraq, potentially augmenting the global oil supply. The Rapidan Group, an energy consultancy firm, speculated that Saudi Arabia could scale up its oil production once the Brent crude oil price crosses the US$90 per barrel benchmark.
Wilasinee Boonmasungsong, the research director at Globlex Securities, pinpointed an array of negative influences currently bogging down the Thai stock market. She spotlighted the World Bank’s ominous warning about the escalating household debt, which at present encompasses 80% of the Thai GDP, the highest it has been in the region. She revealed that foreign investors have offloaded Thai stocks worth up to 157 billion baht within this year, while other investor categories have increased their investments. Wilasinee has advised investors to stay alert and regularly monitor government policies, export figures, and trade data. She has also underscored the importance of investors paying heed to the upcoming third-quarter bank earnings reports expected to be released in mid-October.
Asia Plus Securities (ASPS) however, projected a contrasting viewpoint. Still optimistic, the firm held that although the SET index may not witness an immediate surge, the potential slide is likely to be contained. The firm opines that the World Bank’s revised GDP forecast will hardly influence the SET index and is confident that as economic stimulus measures to kickstart the recovery roll out, they will start to show positive results from the fourth quarter of this year, and will boost Thailand’s GDP in the second quarter of next year.
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