Thai stock market turmoil: Is now the time to invest?

A decade-long downturn driven by the flight of foreign investment amid economic decline could be drawing to a close

 

The Thai stock market is grappling with a prolonged crisis of confidence that has seen the SET index plummet and investor sentiment sour. 

 

A range of factors, from corporate governance scandals to global economic uncertainties, have triggered a decade-long stagnation, with the market now facing critical questions about its future.

 

 

Market in decline: Key figures and trends

The Set Index’s dramatic downturn began with the onset of the COVID-19 pandemic in March 2020. Over the five-year period from March 5, 2020, to March 4, 2025, the index plunged by 200.97 points, a 14.58% decrease, settling at 1,177.64 points. 

 

Average daily trading volumes over 1,211 days stood at 63,868.14 million baht, falling from a peak of 175,296.31 million baht in May 2021 and a trough of 21,857.77 million baht in December 2023.

 

Market capitalisation has also suffered, declining by 159,369.64 million baht, a 1.07% drop, to 14,671,177.13 million baht. Earnings per share (EPS) fell by 14.85% to 73.42 baht. 

 

Driving the decline is net selling by foreign investors, amounting to 431,344.17 million baht, while domestic funds have also offloaded 70,720.73 million baht. Retail investors, conversely, have been net buyers, absorbing 482,365.61 million baht, supported by brokerage purchases of 19,699.29 million baht.

 

 

External pressures and political instability

The market’s woes are compounded by external pressures, notably the return of Donald Trump as US president along with his “America First” trade policies. The resulting trade war has further destabilised the already fragile economic environment.
  

Domestically, persistent political instability continues to weigh heavily on investor confidence. Reports of rifts within the coalition government have exacerbated market volatility, with the SET index falling by 15.90% between January 2 and March 4, 2025, to 1,177.64 points. Foreign investors have continued their net selling, with further fund and broker sell offs also recorded.

 

 

History of scandals and eroding trust

The current crisis is not an isolated incident. A series of corporate governance scandals over the past decade has severely eroded investor trust. The period began in 2017 with concerns raised about the financial statements of Group Lease PCL (GL), followed by the delisting of Energy Earth (EARTH).

 

The COVID-19 pandemic in 2020 delivered a further blow, sending the SET index plummeting to 969.08 points before recovering on the back of global stimulus measures and vaccine rollouts. 

 

However, the 2022 “brokerage money heist” involving More Return PCL (MORE) and the 2023 accounting fraud at Stark Corporation (STARK) have further undermined market integrity.

 

 

Economic outlook

The National Economic and Social Development Council projects the Thai economy to grow between 2.3 and 3.3% in 2025, driven by government spending, private consumption, investment, and tourism. The Thailand Development Research Institute forecasts a similar growth range of 2.5 to 3.0%, with inflation expected to remain low.

 

Sombat Narawutthichai, secretary-general of the Investment Analysts Association (IAA), reports that analysts and fund managers anticipate the SET index fluctuating between 1,322 and 1,581 points this year. He identifies foreign capital outflows, domestic political issues, and global economic factors as key challenges. 

  

Analysts urge the government to implement economic stimulus policies, including infrastructure investment, support for new industries, and tax reductions.

 

Maybank Securities (Thailand) forecasts market volatility due to US tariffs but suggests that easing tariffs and Chinese stimulus could boost sentiment. They advise investors to monitor key economic indicators, central bank policies, and geopolitical developments.

 

 

Key questions and future prospects

The critical question facing investors is whether the current market conditions represent an opportunity or a trap. With economic uncertainties persisting and foreign investment slow to return, the market’s recovery hinges on restoring investor confidence and addressing fundamental issues.

 

Can the market rebound without a recovery in corporate profits? Will the Thai economy find new drivers of growth? And with a plethora of investment options available, why should investors choose the Thai market?

 

Ultimately, the market’s resurgence depends on more than just low stock prices. It requires robust fundamentals and sustainable profit growth. Only then can investors be assured that the time is right to return.

(2025/03/07-00:00)