Thai stocks may fall to Covid lows amid political crisis: analysts
Amid the existing headwinds from tariff uncertainty and the faltering tourism revenue, the Stock Exchange of Thailand's (SET) benchmark index has already wilted 23.8 per cent since the start of the year as at Friday (Jun 20), placing it last among all global equity indices, according to Bloomberg data.
The market sell-off intensified in recent days as political jitters flared, following a leaked phone call between officials in Bangkok and Phnom Penh which heightened tensions along the Cambodian border. With economic headwinds already pressuring sentiment, analysts warn the bloodbath on the bourse may not yet be over.
'If foreign fund outflows accelerate and the prime minister faces calls to resign or a no-confidence vote, the SET Index could test 2020 Covid lows,' said Manish Bhargava, chief executive at Straits Investment Management. The index had fallen to a low of 969.1 points in March 2020, a level not seen since late-2011.
Thailand's stock exchange was the worst-performing bourse in Asean on Thursday, with the SET Index plunging 2.4 per cent to 1068.7 – its sharpest drop this year – after the call was leaked on Wednesday. While other regional markets also posted losses, they did not match the scale of the Thai sell-off, underscoring growing investor unease as the kingdom faces domestic instability and macro headwinds.
The losses came as a leaked phone call between Thai Prime Minister Paetongtarn Shinawatra and former Cambodian prime minister Hun Sen on Wednesday incited the Bhumjaithai Party (BJT) to announce its exit from the ruling coalition government.
A NEWSLETTER FOR YOU
Friday, 8.30 am Asean Business
Business insights centering on South-east Asia's fast-growing economies.
Sign Up
Sign Up
BJT's withdrawal leaves the ruling coalition, led by Paetongtarn's Pheu Thai Party, with a slim majority by just 18 seats. As calls for her resignation escalate and other coalition partners threaten to withdraw, uncertainty has arisen over the possibility of a Cabinet reshuffle, or a snap election that may lead to a political stalemate.
This could mean a three to six-month wait for a new government to take office, said CGS International (CGSI) analyst Kasem Prunratanamala in a note on Wednesday night. 'We believe that it would be difficult for the SET to perform during this period.'
Bhargava noted: 'Key sectors that are sensitive to political stability – banks, infrastructure and utilities – will likely lead declines.'
Others, however, remained optimistic. OCBC Asean economists Lavanya Venkateswaran and Jonathan Ng maintained a baseline scenario of the political situation staying contained in a note on Jun 18, citing Paetongtarn's reconciliatory tone.
The SET Index closed lower on Friday at 1067.6 points, falling 0.1 per cent.
Tourist slump
A slump in tourist arrivals to Thailand has reverberated through its economy, with the sector accounting for around 12 per cent of gross domestic product and employing more than 20 per cent of workers in 2024, according to the Bank of Thailand (BOT).
Foreign tourist arrivals to the country dipped 11 per cent in May from the previous month, continuing what has been a slow start to the year for the industry. The 14.3 million tourist arrivals during the first five months of 2025 were down 2.7 per cent from the previous corresponding period last year, and brought in 1.9 per cent less revenue at about 668.4 billion baht (S$26.2 billion), according to a Bank of America note.
The bourse's tourism sector, comprising stocks including spa operator Siam Wellness Group and hotel operators Central Plaza Hotel and Erawan Group, has fallen about 23.4 per cent since the start of the year.
But hopes of a sector-wide revival have also led some analysts to look with more optimism at stocks that have been battered hard by the slump. 'The tourism sector has already priced in the bad news,' UOB said in a Jun 5 note, naming stocks such as Erawan Group and mall operator Central Pattana as rebound plays. 'We expect tourist arrivals to recover in the third quarter of 2025,' said UOB analysts Kitpon Praipaisarnkit and Krit Tanarattananon.
Yet while the tourism sector's dips may have bottomed out, CGSI analyst Thanapol Jiratanakij does not foresee a 'swift recovery' in arrivals – largely owing to the declining popularity of the nation among Chinese tourists.
Increasing safety concerns from incidents such as the abduction of a Chinese actor in January and an earthquake in March have put off some Chinese nationals, who have turned towards domestic tourism and other regional alternatives for leisure travel.
Existing headwinds to tourist arrivals have also hit the country's retail sector, highlighted by unlisted retailer King Power's request to terminate its duty-free concession contracts with Airports of Thailand.
Maybank had earlier downgraded the broader retail sector to neutral, with companies such as department store operator Central Retail receiving 'hold' ratings. The bank cited sector-wide headwinds in muted consumption, falling tourist arrivals and a subdued economic outlook.
'Restoring confidence among Chinese tourists will require real improvements in safety and perception,' CGSI's Thanapol said. 'In this regard, we believe the government still has considerable work to do.'
But as Paetongtarn's leadership remains uncertain, such efforts to boost the domestic economy may no longer be on the cards. 'The timing could not be more inconvenient considering (the) external headwinds,' said OCBC's Venkateswaran and Ng.
As observers await the BOT's policy decision on Jun 25, ANZ Asia economist Krystal Tan expects the central bank to hold its benchmark rate at 1.75 per cent until the fourth quarter – but a worsening political gridlock may force the BOT into a rate cut.
This may provide a catalyst to Thai stocks amid the wavering political situation, said CGSI's Kasem. He maintained the index's target at 1,200 points, citing its relative undervaluation to its peers.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
2 hours ago
- Straits Times
US hiring beats expectations in June despite tariff worries
Sign up now: Get ST's newsletters delivered to your inbox Job growth came in at 147,000 in June, rising from a 144,000 figure in May – which was also revised upwards. - The US economy added more jobs than expected in June while the unemployment rate edged down, government data showed on July 3, offering signs of continued labour market strength despite worries over President Donald Trump's tariffs. Job growth came in at 147,000 in June, rising from a 144,000 figure in May – which was also revised upwards – said the Department of Labour. The unemployment rate ticked down from 4.2 per cent to 4.1 per cent, and wage gains decelerated to 0.2 per cent, the report added. The world's biggest economy has fared relatively well since the Covid-19 pandemic, with a resilient job market allowing consumers to keep spending. But Mr Trump's sweeping tariffs on US trading partners, including steep rates on imports of steel, aluminium and autos, have dragged on consumer sentiment and fuelled business uncertainty. That uncertainty has been accentuated by the US leader's approach of unveiling, then adjusting or halting measures – causing firms to become cautious in investments. With a further wave of tariff hikes potentially incoming next week, analysts are monitoring for fragility in the job market and signs that companies might pull back in hiring and expansion. Top stories Swipe. Select. Stay informed. Singapore 193ha of land off Changi to be reclaimed for aviation park; area reduced to save seagrass meadow Business More Singapore residents met CPF Required Retirement Sum when they turned 55 in 2024 Singapore PAP questions Pritam's interview with Malaysian podcast, WP says PAP opposing for the sake of opposing Singapore 1 in 4 appeals to waive HDB wait-out period for private home owners approved since Sept 2022 World Liverpool's Portuguese forward Diogo Jota dies in car crash in Spain Singapore Healthcare facility planned for site of Ang Mo Kio Public Library after it moves to AMK Hub Singapore $500 in Child LifeSG credits, Edusave, Post-Sec Education Account top-ups to be disbursed in July Business 60 S'pore firms to get AI boost from Tata Consultancy as it launches new innovation centre here A consensus forecast by had expected overall job growth of 120,000. In June, the state government and health care sectors added jobs while the federal government continued shedding roles, the Labour Department said July 3. The federal government lost 7,000 jobs and employment is down by 69,000 since reaching a recent peak in January, the report added. But salary growth appears to be cooling, from a 0.4 per cent month-on-month increase in May to 0.2 per cent in June. From a year ago, wage gains were up 3.7 per cent, easing from the prior month as well. But the figures will bring relief to observers worried after data from payroll firm ADP sparked alarm July 2, as it reported that the private sector unexpectedly shed jobs. It is not uncommon for the ADP report to diverge from official figures, but analysts believe it can help understand the longer-term trajectory of the labor market. ADP noted July 2 that although layoffs were rare, there remains a hesitancy to hire and replace departing workers. For now, a solid labour market is likely to give the US central bank some room to hold interest rates steady for longer as policymakers observe the effects of Mr Trump's tariffs over the summer – and whether they will fuel broad inflation. If the labour market weakened too quickly, the Federal Reserve could be inclined to lower rates sooner to boost the economy, even if inflation were not progressing downwards as swiftly as hoped. AFP
Business Times
2 hours ago
- Business Times
US job growth beats expectations in June, unemployment rate dips to 4.1%
[WASHINGTON] US job growth was solid in June while the unemployment rate unexpectedly fell to 4.1 per cent, suggesting the labour market remained stable and potentially allowing the Federal Reserve to delay resuming cutting interest rates until September. Nonfarm payrolls increased by 147,000 jobs last month after an upwardly revised 144,000 advance in May, the Labor Department's Bureau of Labor Statistics said in its closely watched employment report on Thursday (Jul 3). Economists polled by Reuters had forecast payrolls rising 110,000 following a previously reported 139,000 gain in May. Estimates ranged from an increase of 50,000 to 160,000 jobs. The report was published a day early because of the Independence Day holiday on Friday. Despite the bigger-than-expected rise in payrolls, job growth is slowing, mostly reflecting tepid hiring. Layoffs remain fairly low, with employers generally hoarding workers following difficulties finding labour during and after the Covid-19 pandemic. Economists say President Donald Trump's focus on what they call anti-growth policies, including sweeping tariffs on imported goods, mass deportations of migrants and sharp government spending cuts, has changed the public's perceptions of the economy. Business and consumer sentiment surged in the wake of Trump's victory in the presidential election last November in anticipation of tax cuts and a less stringent regulatory environment before slumping about two months later. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The unemployment fell from 4.2 per cent in May. Economists had expected the jobless rate to tick up to 4.3 per cent. Indicators, including the number of people filing for state jobless benefits and receiving unemployment checks, have pointed to labour market fatigue after a strong performance that shielded the economy from recession as the US central bank aggressively tightened monetary policy to combat high inflation. Most economists expect the jobless rate will rise through the second half of this year, and potentially encourage the Fed to resume its monetary policy easing cycle in September. The Fed last month left its benchmark overnight interest rate in the 4.25-to-4.50 per cent range, where it has been since December. Fed chair Jerome Powell on Tuesday reiterated the central bank's plans to 'wait and learn more' about the impact of tariffs on inflation before lowering rates again. REUTERS
Vogue Singapore
5 hours ago
- Vogue Singapore
As Singapore's F&B businesses shutter, what is left in their wake?
Heidi Tan was 21 years old when she decided to open her own patisserie. 'When you start so young, you don't have as much fear because you haven't tasted failure yet,' the Le Cordon Bleu-trained chef says with a laugh. 'I would say that starting a business is fairly easy. But sustaining a business'—she pauses, her tone turning pensive—'that is the difficult part.' Tan opened Flor Patisserie's first outlet on Duxton Hill in 2010, before the area became a magnet for the hip restaurants that line its streets today. 'There was no other Japanese patisserie in Singapore back then,' she confirms. 'We were the leader in this category, which put us in a very good spot.' The patisserie quickly gained a dedicated fan following for its intricate Japanese-inspired French pastries and cakes, always made fresh and with the highest-quality ingredients available. With the help of a small but growing team, Tan expanded the business's footprint across Singapore, from kiosks in high-traffic malls like Ngee Ann City and Funan to a storefront on East Coast Road. Flor Patisserie's Duxton Hill outlet, which closed in 2024 after 14 years of operation. @flor_patisserie Today, the brand operates from a single outlet in a stretch of quaint shophouses on Siglap Drive, where it has been for 12 years. Located in a largely residential area with veterinary clinics and tuition centres as its neighbours, the cake shop has become a beloved community fixture which draws customers from all corners of the island—a winning example of Singapore's fervent food culture. That is, until July this year. Facing an unsustainable rent hike (a proposed increase in the monthly rent from $5,400 to $8,500, a 57 percent rise), Tan has made the difficult decision to close Flor Patisserie's final outlet. 'It was the pandemic that opened my eyes to how unsustainable running a brick-and-mortar business is in Singapore. Even big chains find it difficult to survive—so what more small, independent businesses, which don't have economies of scale to rely on?' Tan reflects, pointing to global chains like Hai Di Lao and Burger & Lobster, among others, which have shuttered in the past year. To survive the sluggish markets brought on by COVID-19, Tan had made the decision to close Flor Patisserie's higher-rent units in Duxton and East Coast, instead consolidating her resources into her Siglap Drive outlet. 'When we closed all the other shops at the height of the pandemic and retreated to this one, I did my calculations and told my team that the next two years were going to be hard. I wouldn't be able to give them their annual increment. But they understood completely,' Tan shares, her eyes welling up with tears. 'That's why I'm very sad to have to let them go now. Because they stood by me still.' Singapore's dining scene is headed in a troubling direction: flattened and faceless, rather than a true reflection of the country's character. For Tan's business to survive, a 57 percent hike in rent would require her to pass on a bulk of the cost to her customers—something she's reluctant to do. 'I will need to increase my prices at least by 30 percent,' she explains. 'This will completely alienate my patrons. 'We lost many customers when we closed our other outlets because it was a hassle to travel here. Our location is not the best as it has very little parking available and is 20 minutes from the nearest MRT station. We foresaw that drop in sales and planned for it—but now, with the rent increase, it just doesn't make sense.' The recent cascade of homegrown restaurants, bars and cafes shuttering across the island signals that Singapore's culinary landscape is headed in a troubling direction: flattened and faceless, rather than a true reflection of the country's character and the melange of identities that exist within it. This move towards becoming a hyper-globalised destination dominated by universal name-brands begs the question: what do we stand to lose when local businesses cannot survive? 'It is the small, independent business that adds vibrancy to the market,' Tan says. 'Local brands represent what the Singaporean identity truly is. As more big international businesses replace the small guys, the landscape will inevitably become sterile and cookie-cutter.' If this is Flor Patisserie's final chapter, what Tan finds the hardest to say goodbye to are the loyal patrons she has served time and time again, seeing them through numerous milestones. 'We have customers who started dating, then got married, then had children. And we've made the cakes for them to celebrate each occasion,' she says, emotion clouding her voice. 'That's what disappoints me the most about having to close—the community that has kept us going all these years and that we will no longer get to serve.' Hazel Long, Junior the Pocket Bar Hazel Long fell into bartending by accident. 'People don't believe me when I say this, but when I entered the industry, I didn't drink. I was looking to earn extra pocket money while in university and knew nothing about being a bartender,' she says. Today, the 30-year-old helms Junior the Pocket Bar, a speakeasy on Ann Siang Hill known for attracting a stylish, insider crowd. In Long's words, Junior became a cult favourite not because of size but soul. The bar rotates between a diverse Rolodex of concepts, from New Orleans jazz to Korea's Joseon dynasty, with a full remodel—from decor to cocktail list—accompanying each new theme, making the experience exceptionally immersive. Junior the Pocket Bar. Courtesy of Junior The Pocket Bar When Long announced Junior's seemingly abrupt closure earlier this year, messages of grief and support poured in from across the industry. 'If I could have kept us open, I would have,' she muses. 'The truth is that I had reached a point beyond burnout. With constant inflation, it became unsustainable to keep going.' Long had originally started running Junior with a partner, who left the business during COVID-19. 'The pandemic was challenging. Almost every day, we had to navigate new guidelines in order to stay open while keeping our patrons safe. But I took on ownership because I wanted to keep the spirit of Junior alive and also take care of my team.' It was ultimately the long-term effects of the pandemic, rather than its most immediate challenges, that took the largest toll on the business. 'Pandemic lockdowns fundamentally shifted Singapore's cocktail culture. As people got accustomed to staying home, the desire to spend nights out also seemed to dwindle,' Long reflects. 'Before COVID-19, it was normal for a pair of guests to have five drinks between them in two hours. These days, it's often just one each. That loss adds up, especially in a space where every seat is precious real estate.' Long points to this drop in spending, combined with inflationary pressures across the board, as the key reasons that running the business became unsustainable. 'When eggs cost more at FairPrice, it's the same for bars. We don't get a special wholesale deal,' she says. 'Everything goes up.' With the growing graveyard of independent businesses shuttering one after another, a culture of fear has begun to take hold of Singapore's F&B industry. Rising costs have led to a steady creep in cocktail prices not only at Junior, but the majority of bars across Singapore. While Long sympathises with customers balking at the nightlife experience increasingly becoming more expensive, she explains that what may look like inflated pricing is often the only way a business can survive. 'There is this conception that bars pour some liquid into a fancy glass and slap a price tag on it at random. Understandably, some patrons don't know what a $28 cocktail actually entails. They don't see the 48 hours of prep that goes behind an infusion or the technique involved in manipulating it until it turns into gold. At a place like Junior, you are also paying for the venue, lighting and trained staff, which all come together to create that curated experience,' Long says. Beyond the loss of a beloved presence in the cocktail community, Junior's closure is also symptomatic of a larger problem: the steady erosion of individuality in our nightlife scene. 'If this keeps going and more independent businesses close, Singapore risks losing its edge and falling off as a nightlife destination,' Long warns. 'We rely heavily on tourism and on places like ours, not just chains.' With the growing graveyard of independent businesses shuttering one after another, she agrees that a culture of fear has begun to take hold of Singapore's F&B industry. This could turn promising talent away from joining the field, worsening the problem further. 'Right now, I'm just trying to grieve properly,' Long says. 'It's easy to feel like you have to move on quickly or find the next thing. But I gave everything I had to Junior. I need time to reckon with that loss.' She's not sure what comes next, but she's not ruling out a return. 'I still love the bar world,' she says with a smile. 'I just need to miss it a little first.' Vogue Singapore's July/August 'Home' issue will be out on newsstands from 13 July and available to preorder online.
