Thailand's Stock Market Forecast Remains Positive Despite Recent Declines
Despite the recent dip below 1,200 points, analysts project a steady recovery for the SET Index, potentially reaching 1,500 points within three years.
On February 28, 2025, the Stock Exchange of Thailand (SET) Index fell below 1,200 points, closing down 20.47 points, or 1.68%, at 1,195.26 points.
The decline is attributed to global market trends, particularly concerns over escalating trade tensions, as U.S. President Donald Trump announced increased tariffs on imports from Canada, Mexico, and an additional 10% on Chinese goods, effective March 4, 2025. The Thai stock market’s dip aligns with declines in regional indices, including the Nikkei, which fell 3%, the Hang Seng by 2.35%, and the KOSPI by 3.27%.
Additionally, the MSCI Rebalance's impact on overall stock prices contributed to this downturn.
Mr. Kavi Chookijkasem, Chief Investment Officer at Pie Securities, commented that while the SET Index was projected to reach 1,400 points in 2024, for 2025, the estimate stood at 1,200 points.
Despite a potential for further decline, he noted that the Thai market appears to be undervalued following two consecutive years of reductions.
The Price to Book Value (P/BV) has recently decreased to 1.2 times, a level similar to valuations seen during the Subprime Crisis and the COVID-19 pandemic.
The Thai market's dividend yield stands at 4%, indicating a strong valuation from various perspectives.
Despite these favorable valuations, Mr. Kavi cautioned against the misunderstanding that low valuations could prevent further declines, emphasizing that global economic conditions could still exert downward pressure on the Thai market.
With the SET Index approaching 1,000 points—approximately a 30% reduction from average crisis levels, which typically see declines of around 50%—this may present a buying opportunity for investors willing to focus on sectors aligned with current industrial trends, as well as defensive stocks such as those in healthcare, tourism, logistics, and banking.
The outlook for 2025 indicates that the Thai stock market is expected to maintain levels above 1,000 points, with projections suggesting that, within 2-3 years, the SET Index might recover to 1,500 points.
However, this recovery is contingent on improvements in both the global and Thai economies.
Economic risks persist, with more than 50% of Thailand's GDP reliant on consumer spending, which has not shown robust growth.
For example, in the fourth quarter of 2024, the government injected 140 billion baht into the economy, yet growth fell short of expectations.
The tourism sector, another cornerstone of consumer spending, saw 35 million arrivals in 2024, with projections for 2025 estimating 38.39 million, reflecting only a 10% growth.
Nonetheless, this figure indicates limited potential for boosting consumption based on tourist arrivals.
In 2025, government investment is anticipated to continue, but with a potential contribution of only 7-8% to GDP growth.
Despite January 2025 showing high export growth, the overall annual growth rate is forecasted at a modest 2%, reflecting ongoing economic challenges.
Political factors also remain crucial in monitoring Thailand’s economic trajectory.
Overall, the primary factors influencing the Thai stock market are the global economic climate and international stock movements, with cautious attention to signs of slowdowns that might indicate a forthcoming recovery.
A significant potential trigger for market recovery is the interest rate trajectory, particularly in the United States, where current shifts in rates indicate an economic slowdown, with projections suggesting interest rates may stabilize around 2-3%.
The decline is attributed to global market trends, particularly concerns over escalating trade tensions, as U.S. President Donald Trump announced increased tariffs on imports from Canada, Mexico, and an additional 10% on Chinese goods, effective March 4, 2025. The Thai stock market’s dip aligns with declines in regional indices, including the Nikkei, which fell 3%, the Hang Seng by 2.35%, and the KOSPI by 3.27%.
Additionally, the MSCI Rebalance's impact on overall stock prices contributed to this downturn.
Mr. Kavi Chookijkasem, Chief Investment Officer at Pie Securities, commented that while the SET Index was projected to reach 1,400 points in 2024, for 2025, the estimate stood at 1,200 points.
Despite a potential for further decline, he noted that the Thai market appears to be undervalued following two consecutive years of reductions.
The Price to Book Value (P/BV) has recently decreased to 1.2 times, a level similar to valuations seen during the Subprime Crisis and the COVID-19 pandemic.
The Thai market's dividend yield stands at 4%, indicating a strong valuation from various perspectives.
Despite these favorable valuations, Mr. Kavi cautioned against the misunderstanding that low valuations could prevent further declines, emphasizing that global economic conditions could still exert downward pressure on the Thai market.
With the SET Index approaching 1,000 points—approximately a 30% reduction from average crisis levels, which typically see declines of around 50%—this may present a buying opportunity for investors willing to focus on sectors aligned with current industrial trends, as well as defensive stocks such as those in healthcare, tourism, logistics, and banking.
The outlook for 2025 indicates that the Thai stock market is expected to maintain levels above 1,000 points, with projections suggesting that, within 2-3 years, the SET Index might recover to 1,500 points.
However, this recovery is contingent on improvements in both the global and Thai economies.
Economic risks persist, with more than 50% of Thailand's GDP reliant on consumer spending, which has not shown robust growth.
For example, in the fourth quarter of 2024, the government injected 140 billion baht into the economy, yet growth fell short of expectations.
The tourism sector, another cornerstone of consumer spending, saw 35 million arrivals in 2024, with projections for 2025 estimating 38.39 million, reflecting only a 10% growth.
Nonetheless, this figure indicates limited potential for boosting consumption based on tourist arrivals.
In 2025, government investment is anticipated to continue, but with a potential contribution of only 7-8% to GDP growth.
Despite January 2025 showing high export growth, the overall annual growth rate is forecasted at a modest 2%, reflecting ongoing economic challenges.
Political factors also remain crucial in monitoring Thailand’s economic trajectory.
Overall, the primary factors influencing the Thai stock market are the global economic climate and international stock movements, with cautious attention to signs of slowdowns that might indicate a forthcoming recovery.
A significant potential trigger for market recovery is the interest rate trajectory, particularly in the United States, where current shifts in rates indicate an economic slowdown, with projections suggesting interest rates may stabilize around 2-3%.
