The Thai stock market experienced a significant rally on September 6, 2024, closing up by 23.36 points to settle at 1,427.64 points, marking a 1.66% increase. This surge was driven by substantial foreign fund inflows into the banking sector, as investors shifted their focus from tech stocks to value stocks. The trading value for the day reached approximately 107.4 billion baht. Analysts attribute this rise to the attractive valuations of major Thai banks, which have become appealing to foreign investors despite earlier concerns over non-performing loans.
Foreign Fund Inflows Boost Banking Sector
The recent rally in the Thai stock market can be largely attributed to significant foreign fund inflows into the banking sector. Major Thai banks such as Bangkok Bank (BBL), Kasikornbank (KBANK), Krung Thai Bank (KTB), and Siam Commercial Bank (SCB) saw increased interest from foreign investors. These banks had previously experienced price drops due to concerns over non-performing loans, making them attractive investments at below book value.
Sarawut Techowalit, Senior Director of Securities Analysis at RHB Securities (Thailand), noted that KBANK and KTB still have upside potential, trading at 0.68 times book value with room to rise to 0.8 times. Similarly, SCB and TTB are now trading at 0.8 times, up from 0.6. This influx of foreign capital has not only boosted the banking sector but also contributed to the overall positive sentiment in the market.
Regional Market Trends
The fund inflows into the Thai stock market are part of a broader trend observed across regional markets, including the Philippines, Vietnam, and Indonesia. Investors have been shifting their focus from growth-oriented tech stocks to value stocks, particularly in the banking and financial sectors. This shift is driven by the attractive valuations and potential for higher returns in these sectors.
RHB Securities recently raised its year-end SET index target to 1,560 points, reflecting a price-to-earnings (P/E) ratio of 16, up from the previous target of 1,430. This revision comes amid expectations of new investments, including 100 to 150 billion baht from the Vayupak Fund and ongoing foreign fund inflows. The positive outlook for the Thai stock market is further supported by the anticipated stability in the U.S. economy, with the Federal Reserve potentially considering a rate cut in September if the unemployment rate remains at 4.3%.
Future Market Outlook
Looking ahead, the Thai stock market is expected to continue its upward trajectory, driven by sustained foreign fund inflows and positive economic indicators. Analysts project key resistance for the SET Index at 1,460 points, with support at 1,410 points. The market’s performance will also be influenced by upcoming economic data, including the U.S. non-farm payroll and unemployment figures for August.
Investors are advised to monitor these developments closely and consider the potential impact on their investment strategies. The banking sector, in particular, remains a focal point for foreign investors, offering attractive valuations and growth potential. As the Thai stock market continues to navigate global economic uncertainties, the influx of foreign capital is expected to play a crucial role in shaping its future performance.
