Foreign investors were net sellers of US$1.1 billion (37 billion baht) worth of shares on the Thai stock exchange in February, the highest value among Asian bourses for the month and the biggest net sell-off on the exchange since April 2020, with several factors pressuring investments, according to analysts.
Foreign investors sold 3.33 billion baht worth of Thai shares on Tuesday, according to LH Securities. The current account deficit reached $2 billion in January, as reported by the Bank of Thailand on Tuesday, prompting continued capital outflows and a further weakening of the baht.
In the first two months of this year, foreign net selling totalled 25.2 billion baht, with the Stock Exchange of Thailand (SET) falling 3.4%, or 56.62 points, over the period.
"The Thai stock market has been pressured by several factors including geopolitical risks, US inflation, weak financial results of listed Thai companies in the final quarter of 2022, and depreciation of the baht by about 5% year-to-date," said Therdsak Thaveeteeratham, executive vice-president of Asia Plus Securities (ASPS).
While waiting for negative factors and fund outflows to subside, ASPS recommends having 10-30% in cash and holding stocks with high dividends and low volatility when compared with the overall market, he said.
"At the moment, there is still no signal from foreign investors on when they will resume buying Thai stocks and they continue to be sellers, especially in the bond market," said Kavee Chukitkasem, head of research at Pi Securities.
Foreign investors remain worried about the Federal Reserve's interest rate hikes because US economic data was better than the market expected, especially January inflation and retail sales, he said.
"It is unlikely foreign investors will return to buy stocks in the Thai market in the short term. We have to wait for new positive factors," said Mr Kavee.
Yuanta Securities Research said the profit of listed Thai companies in the fourth quarter last year was lower than expected, making the Thai stock market less attractive to investors.
"If the Fed keeps raising interest rates and rates remain high for longer than previously expected, the US dollar would appreciate further, in return weakening the baht," said the brokerage.
Yuanta Securities acknowledged if Thailand's economic figures showed clear signs of improvement, that would prompt foreign investors to start buying Thai stocks again.
The Fiscal Policy Office recently stated that inflationary pressure in Thailand eased in January, amid improving domestic consumption. Automobile sales and private investment also recovered from the previous month.
