Thailand's market outlook remains bleak, failing to see a revival despite the nation's first election since 2019. The benchmark stock index is on track for its fifth consecutive quarterly decline, with foreign investors pulling out and the Thai baht becoming one of Asia's worst-performing currencies.
According to Narongsak Plodmechai, CEO of SCB Asset Management Co., a significant rally in Thai stocks is unlikely without a rebound in corporate earnings. The country's economic slowdown has led to a reduction in corporate earnings forecasts to a two-year low, and anticipated fiscal stimulus measures have been delayed.
Bualuang Securities Pcl anticipates the benchmark equity index to stagnate in the second quarter. Foreign investment outflows have reached $5.5 billion in 2023, marking the highest withdrawal since 2020. This trend is exacerbated by domestic investors' waning interest in Thai stocks.
The decline in corporate earnings, which fell by 11% last year, is largely attributed to weak consumer demand amidst high household debt. Notable companies like Thai Credit Bank Pcl, Central Retail Corp., and Bangkok Bank have seen significant drops in their stock prices.
Prime Minister Srettha Thavisin's call for a rate cut contrasts with the Bank of Thailand Governor Sethaput Suthiwartnarueput's stance, who has kept the policy rate unchanged, pointing to structural economic issues. This has led to a fourth consecutive month of net bond outflows, totaling $612.5 million in March alone.
Goldman Sachs analysts highlight the Thai baht's potential underperformance, noting the country's exclusion from the high-tech semiconductor supply chain. Political uncertainties, such as the potential disbandment of the largest opposition party, could further destabilize the economy, which is expected to grow by 2.2%-3.2% this year.
Analysts believe that Thailand's underperformance compared to its peers is primarily due to a weak macroeconomic growth outlook and disappointment over the lack of government stimulus measures.
