CLARITY over the date for the national election helped spur a rebound in the stock market for the first month of this year, snapping a trend of net fund outflows that weighed on the bourse last year.
The Stock Exchange of Thailand (SET) Index ended January at 1,641.73 points, a 5 per cent increase over December’s mark.
In late January, the Election Commission (EC) announced that the long-awaited election will be held on March 24.
“The key domestic factor push?ing the level of investment in Thailand’s capital market is the clarity on the election date,” Soraphol Tulayasathien, senior executive vice president and head of corporate strategy division for the SET, said yesterday at a press conference.
Soraphol told reporters that the external risk factors remain the same as in 2018, consisting of the US-China trade war and the prospects for the US Federal Reserve to increase interest rates.
“However, the Feds announced towards the end of last year that they will take a more careful approach to their monetary policy, and we have since seen a rebound in the level of investors’ confidence, leading to increased investment in January,” he said.
Soraphol sees the SET Index rebound in January as a positive indicator that the exchange will start to recover from the fund out?flows trend in 2018, which saw a 10.8 per cent index decrease year on year.
SET president Pakorn Peethathawatchai is also looking for post-election stability.
“In the upcoming months, the prospects for the stock market hinge on the stability in the road towards the upcoming election, as well as the level of post-election political stability. Furthermore, we will also have to keep an eye on the developments of the trade war as well as US interest rates,” said Pakorn.
Soraphol said the January fund flows into the SET reached $214 million (Bt6.68 billion). This marks a significant improvement after the SET saw a negative flow through?out the four quarters of 2018.
The liquidity of the Kingdom’s stock market also improved in January, seeing an increase in the level of daily trading from Bt42.057 billion in December last year to Bt48.582 billion. Of the total daily trading in January, Bt5.708 billion was from proprietary traders, Bt6.241 billion from local institutions, Bt18.866 billion from foreign investors and Bt17.766 billion from local investors, according to figures from the SET Market Analysis and Reporting Tool (SETSMART).
The level of foreign investment resurged in January, increasing by up to 6.8 per cent month on month. Pakorn cited the strengthening of the baht, as well as the prospect of the Bank of Thailand increasing interest rates in 2019, as the key pull factors for foreign investors.
Thailand is the regional leader in the total value of initial public offerings so far in 2019, coming first in the Asean region with $150 million in share sales in January. It was followed by Indonesia at $75 mil?lion, Malaysia at $25 million and Singapore at $9 million, according to the SET.