The Thai stock market remains attractive as listed companies continue to make profits and the bourse has recorded positive net fund inflows the last two months.
Pakorn Peetathawatchai, the Stock Exchange of Thailand (SET) president, said this year the bourse will focus on investment products linked to global indices such as depositary receipts and fractional stocks to allow easier investment in baht units with less money, as well as encouraging diversification. Fractional shares are expected to be launched in the third quarter.
According to the SET, fund inflows were positive for two consecutive months. In December 2021, the fund inflow was around US$690 million or about 23 billion baht. In January 2022, it was around $426 million or 14 billion baht.
Bualuang Securities forecasts listed firms will report net profit of 955 billion baht for 2021, rising to 1.12 trillion baht in 2022. Asia Plus Securities expects listed firms to make about 940 billion baht in profits in 2022.
Securities analysts have a positive view on the Thai economy this year and believe it will grow 3.5-4.5% thanks to the recovery of tourism and improving Covid situation.
The IMF maintained its projection for global economic growth in 2022 and became less concerned about the new wave of Covid given increasing vaccination rates. However, the global economy has not fully recovered because of supply chain disruptions that have caused higher inflation in many countries.
To tame inflation, central banks in many countries are expected to start tightening monetary policies, resulting in declining prices of risky assets, especially growth stocks, and a negative correlation with bond yields in January.
Soraphol Tulayasathien, the SET's senior executive vice-president, said the Covid situation in Thailand as of January was under control. Inflation has a relatively limited impact on the Thai economy, which is likely to recover thanks to growing exports, he said.
The service and tourism sectors are expected to benefit from the country's reopening, driving an economic rebound, said Mr Soraphol. As a result, fund flows from foreign investors returned to the Thai stock market for a second consecutive month.
The SET's historical price-to-earnings (P/E) ratio was 14.85 at the end of January, lower than the average of 16.7. It was also below pre-Covid levels and the lowest in eight years. The low ratio suggests stock prices are attractive, especially considered in tandem with the profits of listed companies over the past 12 months.
The SET's forward P/E ratio was 17.5 at the end of last month, exceeding the Asian markets' average ratio of 13.4.
