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The Stock Exchange of Thailand (SET) yesterday ended the day at 3 ½ year low and hopes of a possible recovery seems highly unlikely at least until next week.
The SET Index ended the day down 9.91 points to end the day at 1,328.41 points, the lowest level seen November 9, 2020, when the SET Index was at 1,285.88 points.
Brokers have come out to point various factors for the continued decline in the bourse among them is the ongoing political uncertainties ahead of the possible hearing of the case against incumbent Prime Minister Srettha Thavisin for his fiasco in appointing former convicted lawyer – Pichit Chuenban to the position of Minister to the Prime Minister’s Office, and former Prime Minister Thaksin Shinawatra who is set to go to report to the Office of the Attorney General (OAG) on June 18th for the allegations on breach of lese majeste rules.
This is not taking into account the possible dissolution hearing of the largest political party – Move Forward, that the court has set a date to start the hearing on June 12th.
To top this off reports in Bloomberg that the government of Srettha was looking to find says to have a tighter control of the Bank of Thailand (BoT) has spooked the market as the BoT is usually in-charge of the monetary policy while the government is in-charge of the fiscal policies. With the government holding tighter control of the BoT, investors fear that the economy could be in for a tailspin as there would be no check and balance between those handling the monetary policy and those the fiscal policy.
RHB Securities (Thailand) noted that shares on the bourse came under pressure following Bloomberg’s report.
The report said that one option is the appointment of the central bank’s chairperson, whose position will become vacant in September. The chairperson will have the authority to evaluate the BoT governor’s performance and participate in the selection of outside experts for the Monetary Policy Committee. These reports have raised concerns over the central bank’s independence, RHB stated.
Continued Foreign Selling
Foreign investors, who Prime Minister Srettha has been trying to lure back into Thailand, have been on a selling spree and despite all the efforts being made, were net sellers of 3.18 billion Baht yesterday.
This selling yesterday took the tally of net foreign selling by foreign investors to 87.71 billion Baht so far this year.
This is nearly 46% of the total net selling seen by foreign investors in 2023 when they sold a net of 192.49 billion Baht worth of Thai equities. Out of this 192.50 billion Baht sold in 2023, about 60.66 billion were sold after Prime Minister Srettha Thavisin took office on August 22, 2023.
The lack of stimulus to lure foreign investors back into the country coupled with low appetite for investments in a country where consumption remains subdued and economy at best is set to grow by no more than 2.5% after having grown just 1.5% during the 1st quarter of this year.
Despite the pessimism about economic growth and the lack of investor’s interest in investing in Thailand, the data shows that things are improving.
Pipat Luengnaruemitchai, economist at Kiatnakin Phatra Securities came out to say in a note to clients yesterday that the speed at which the disbursement has taken place is astonishing.
“Since the fiscal year 2024 budget was enacted in late April, we observed a significant improvement in the disbursement of government investment expenditures in May, which was earlier than previously expected,” he said.
“The preliminary investment disbursement recorded at 115 billion Baht, representing a growth of 189.2% year-on-year (YoY). The disbursement rate was 29.2% of the total investment budget, which is still lower than the five-year average of 36.8%. For year-to-date 2024, the investment disbursement was 231 billion Baht, decreased by -23.7% YoY.”
Technical Charts in Bloodbath
For those looking at the chars, the bloodbath in the market has some more room to slash a few more knives to make investors bleed a bit more.
According to technical chart of Tisco Securities if the market broke the 1,335 points (which it broke yesterday) the next ‘support’ level is likely at 1,300 points.
As they say a picture says 1,000 words, so best is for you to take a look at the picture below to understand the resistance and support levels now that the SET Index is already trading at levels seen during the Covid-19 pandemic sell off.
