Is Thailand’s stock market poised for a recovery?

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By Gerald Wong, CFA • 12 Jun 2024 • 0 min read

Thailand's economy is expected to recover in the second half of 2024. We find out what this may mean for Thailand's stock market.

Is Thailand’s stock market poised for a recovery.jpg
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This article was created in partnership with ASEAN Exchanges. The views and opinions expressed are Beansprout's objective and professional opinions.

What happened?

Investors appear to be taking a renewed interest in Thai stocks, with global funds buying Thai equities by the most in more than a year recently

Indeed, there appears to be some glimmer of hope in the Thai stock market, with data points pointing to a potential economic recovery in the second half of 2024. 

Firstly, the Thai Cabinet has approved the 500 billion baht (US$13.5 billion) “digital wallet” stimulus policy, which will give 10,000 baht (US$270) to 50 million Thais to be spent in their local communities. 

Next, tourist arrivals have staged a strong recovery following the waiver of visa requirements for Chinese tourists. International tourist arrivals reached 5.98 million from the beginning of the year until 25 February, a 48% increase compared to the same period last year.

With Southeast Asia’s second largest economy expected to stage a rebound, Thailand is back on the radar of investors once again.

Why Invest in Thailand?

Outside of these near term drivers, there are several long term structural drivers that have made Thailand attractive to investors looking at investment opportunities in emerging markets to gain exposure to dynamic economies.

These include its economic growth potential, the resilience of its tourism industry, growing domestic consumption, government initiatives, as well as attractive dividend yields. 

#1 - Economic Growth Potential

According to the latest forecasts by the Ministry of Finance, Thailand’s economy is expected to expand by 2.4% in 2024. 

This is an acceleration from the growth of 1.9% in 2023. 

Thailand’s finance ministry further estimates that growth could reach 3.3% if the government’s digital wallet plan is launched in the fourth quarter as planned. 

Thailand's economy expected to recover in 2024

#2 - Recovery in the tourism Industry 

Thailand is one of the top tourist destinations globally, and Bangkok has been consistently ranked as one of the world’s most visited cities.  

As a result, the tourism sector is an important economic engine, representing about 11% of its GDP and contributing 20% of total employment in 2019. 

The total amount of tourist arrivals into Thailand reached 28 million in 2023, more than doubling from the 11.5 million arrivals in 2022. However, they remain below its peak of 40 million in 2019. 

The government is targeting 35 million foreign arrivals this year, an increase of 25% from 2023, driven by a recovery in Chinese tourist arrivals.

In 2023, the number of Chinese arrivals of 3.5 million represents only 32% of its peak in 2019. However, The momentum of Chinese tourist arrivals has improved towards the end of 2023 with the visa waiver policy which has been effective since late September and reached 49% of 2019’s arrivals in December. 

The momentum is expected to continue as the visa waiver has been extended with a permanent mutual visa-waiver agreement taking effect from 1st March.

Thailand's tourist arrivals expected to recover in 2024E

#3 - Growing Middle Class and Domestic Consumption

Another key engine of Thailand’s economic recovery is domestic consumption, supported by its growing middle class. As incomes rise, there is increased demand for goods and services, providing opportunities for companies operating within the country to expand and thrive.

Also, Thailand has a relatively young population, which is beneficial for long-term economic growth. A youthful workforce supports productivity and innovation, driving the economy forward. 

This is reflected in the resilient household spending, with consumer spending increasing by 5.2% in the fourth quarter of 2023 compared to the previous year. 

Thailand’s consumer spending supported by growing middle class

#4 - Government initiatives to boost the economy

While Thailand has experienced political fluctuations in the past, the current government led by Prime Minister Srettha Thavisin has been focusing on creating a stable and conducive environment for business and investment. 

The government has laid out a number of initiatives to boost domestic consumption and incomes. Apart from the “digital wallet” scheme, it aims to raise the daily minimum wage to THB 600 by 2027. It also targets to increase the monthly household income to at least THB 20,000. 

Consumer sentiment has stayed high

The Thai government has also been proactive in implementing policies to stimulate economic growth and attract foreign investment. 

For example, there have been significant investments in technology and digital infrastructure, promoting fintech, e-commerce, and other tech-driven industries. This has led to the birth of some well-known tech companies as such logistics company Flash Express, fintech Ascend Money, crypto platform Bitkub, as well as food delivery company Line Man Wongnai. 

#5 - Attractive Valuations and Dividend Yields

Currently, Thai stocks are trading at a discount to their historical average price-to-earnings valuation.

Additionally, many Thai companies offer generous dividend yields, providing investors with a steady income stream. 

According to the SET, there are 141 listed companies which have good, continuous profits; liquidity in operations; and good corporate governance. According to SET data, 141 listed companies meet the criteria.

These stocks have an average dividend yield of 4.11%, above the market average of 2.88%. In fact, 43 of the 141 companies have a five-year average dividend yield of above 5%. 

As of 29 March 2024, the top 10 dividend yield stocks based on five-year averages are Sherwood Corporation (SWC) (11.6%), Lohakit Metal (LHK) (9.98%), Lanna Resources (LANNA) (9.83%), Pruksa Holding (PSH) (9.09%), Sahamit Machinery (SMIT) (7.59%), Tisco Financial Group (TISCO) (7.47%), Namyong Terminal (NYT) (7.37%) and MFC Asset Management (MFC) (7.27%).

This combination of growth potential and income makes Thai stocks appealing to a broad range of investors.

Thailand’s stock market dividend yield is above historical average

What are some risks to look out for?

Investors should remain mindful of risks when considering investments in the Thailand market.

Some of these risks include macroeconomic risks, regulatory risks as well as currency risks. 

Macroeconomic risks: Thailand’s economy is exposed to external factors such as interest rate changes and economic conditions in major trading partners. For example, a prolonged slowdown in China may lead to weaker exports and slower than expected recovery in tourist arrivals for Thailand. 

Regulatory risks: Thailand’s political landscape can be complex, and changes in government policies and regulations can impact various sectors of the economy. For example, any delays in the implementation of the “digital wallet” scheme may present downside risks to economic growth projections. 

Currency risks: For foreign investors, exposure to the Thai Baht adds another layer of risk. Fluctuations in the exchange rate between the Thai Baht and other currencies can impact the returns of investments. For example, if interest rates in the US were to remain high, they may lead to capital outflows from emerging markets including Thailand, thereby leading to a weaker Thai Baht. 

How can investors gain exposure to Thailand?

Overall, Thailand’s economy is expected to recover in 2024 with a combination of government stimulus, an increase in tourist arrivals, as well as resilient consumption spending.

Investors who are looking to gain exposure to the growth potential of Thailand can do so through a broker which offers access to the Thailand stock exchange, or an exchange-traded fund which tracks the performance of the Thailand stock index. 

Within ASEAN, there are also companies which have significant exposure to the Thailand market. For example, Singapore-listed Thai Beverage (SGX: Y92) is Thailand’s largest beverage company which carries the Chang Beer brand. Malaysia-listed CIMB (1023 KL) has exposure to Thailand through its 94.8% stake in CIMB Thai, while Singapore-listed Singapore Telecoms (SGX: Z74) has exposure to Thailand through its 24.99% stake in AIS. 

Investors can also gain access to blue-chip companies in Thailand such as Airports of Thailand (SGX: TATD), PTT Exploration & Production Company (SGX: TPED), and CP All (SGX: TCPD) through Thai Depository Receipts listed on the Singapore Exchange.  

Where can you find more resources on the Thailand stock market?

Conducting thorough research may allow us to capture growth opportunities and mitigate risks when investing in the Thailand stock market.

The Stock Exchange of Thailand (SET) website offers additional resources for you to get the latest company announcements, products, services, and key trading statistics on the Thailand stock market. 

Thailand stock market at a glance

There was a total of 840 companies listed in Thailand as of 31 December 2023, with a total market capitalisation of Bt 17.4 trillion (US$ 481 billion)

There were 40 initial public offerings (IPOs) in Thailand in 2023, with 20 new stocks listed on the Stock Exchange of Thailand (SET) Index and 20 stocks listed on the Market for Alternative Investment (mai) Index.

Some of the listings include decor surfaces and bathroom products company SCG Décor Public Company Limited (SCGD), air traffic control services provider Samart Aviation Solutions Public Company Limited (SAV), cargo services company Asia Network International Public Company Limited (ANI) and automotive retailer Millennium Group Corporation (Asia) Public Company Limited (MGC). 

Within the SET50 index, the largest sectors are engineering (25%), banks (12%), and transport (10%). The largest stocks in the SET50 index by market capitalisation are PTT, Airports of Thailand (AOT), and Delta Electronics (DELTA) as of April 2024. 

Investing in Thailand

About ASEAN Exchanges

ASEAN Exchanges is a collaboration among the exchanges in the ASEAN countries with the objectives of promoting greater integration of the ASEAN capital markets, enhancing the visibility of ASEAN as an asset class, and strengthening ASEAN as an attractive investment destination for both ASEAN and global investors.

Current participating ASEAN exchanges (“Member Exchanges”) are Bursa Malaysia Berhad, Indonesia Stock Exchange, The Philippine Stock Exchange, Singapore Exchange, The Stock Exchange of Thailand, and Vietnam Exchange. 

More information about ASEAN Exchanges can be found here.

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