The Thai stock market, which posted significant capital outflows in the first four months of this year, has begun to record net inflows this week as investors absorbed negative news about the US banking crisis and a potential recession, says the Stock Exchange of Thailand (SET).
Soraphol Tulayasathien, senior executive vice-president, said on Tuesday the SET is hoping May will be a turning point for the bourse after the index was down 5% in April and 8.4% year-to-date.
"The decrease was mainly seen last month, partly due to the number of holidays, and the drop is significant for the one-month period but the same direction was seen in other bourses in Asean," said Mr Soraphol.
In April, the average daily trading value of the SET and Market for Alternative Investment dropped 43.1% from the same period of 2022 to 46.8 billion baht.
Foreign investors were net sellers for the third straight month to the tune of 7.9 billion baht after a four-month net buying streak. However, their trading ratio remained higher than other types of investors for 12 straight months, he said.
"So far, measures taken by the US authorities seem to be sufficient to contain the problems in the banking sector. However, we need to monitor whether those measures will affect bank lending as we have already seen that happening," said Mr Soraphol.
At the same time, the International Monetary Fund's forecast for the global economy is still better than the earlier projection, including that for the US, while the labour market remains strong.
"Based on the current situation, the recession, if happens, would be mild," he said.
Recent Thai economic data indicated that the export and tourism sectors are set to grow.
The country's current account returned to a surplus in March and beat analysts' forecast thanks to the trade and service surplus, resulting in a firmer baht relative to other regional currencies, said Mr Soraphol.
The Thai stock exchange's forward price–to-earnings ratio (P/E) ratio was 15 times at the end of last month, above the Asian stock market's average of 12.4 times.
The historical P/E ratio stood at 18.7 times, exceeding the Asian stock market's average of 13.9 times. Dividend yield ratio was 3.14%, below the Asian stock market's average of 3.36%.
