Thai equities attract foreigners in July

Bangkok Post

3 days ago

Foreign investors continued to pour money into Thai equities throughout July, with net inflows exceeding 11 billion baht as the Thai stock market became more attractive due to a weaker dollar and hopes of a favourable outcome from US-Thai trade negotiations, say analysts.
Koraphat Vorachet, assistant managing director and head of research at Krungsri Securities (KSS), said foreign fund flows into Asian stock markets remain positive, with clear buying signals seen in South Korea, the Philippines and Thailand.
This trend reflects bullish investor sentiment and KSS expects continued net foreign buying across the region for the rest of this month, he said.
According to data from SET Smart, foreign investors were net buyers on 11 out of 12 trading days through July 23, bringing total net inflows to more than 11 billion baht for the month. However, on a year-to-date basis foreign investors recorded net outflows of 67.5 billion baht, while Thai retail investors remained net buyers with more than 93 billion baht.
KSS recommends focusing on large-cap stocks in the spotlight for foreign investors, such as Advanced Info Service (ADVANC), Bangkok Dusit Medical Services (BDMS), Bangkok Bank (BBL), CP All, Gulf Development (GULF), Siam Commercial Bank (SCB) and PTT.
Finansia Syrus Securities has a similar view, noting continued foreign inflows are being driven by the weakening US dollar, which has strengthened Asian currencies and attracted more capital into regional markets.
Investor optimism has also been fuelled by expectations of a potential tariff agreement between Thailand and the US following successful negotiations with Vietnam and Indonesia, which resulted in rallies in their stock markets, noted the brokerage.
Speculators are betting Thailand could follow a similar path, prompting early capital inflows in anticipation of a deal, according to Finansia Syrus.
"Foreign investors see the ongoing US-Thai trade negotiations as a speculative opportunity," said a Finansia Syrus analyst. "Whether Thailand ultimately gains or loses from the deal will determine whether investors increase or withdraw their holdings."
Therdsak Thaveeteeratham, executive vice-president at Asia Plus Securities, expects foreign fund flows to gradually increase in the second half of the year.
"Thai stocks are now trading at attractive valuations, which could lead to a slow but steady accumulation by foreign investors," he said.
Selling pressure from both institutional and foreign investors may ease in the third quarter, said Mr Therdsak. The total value of long-term equity funds has declined to 102 billion baht from 117 billion earlier this year.
Meanwhile, direct foreign ownership in Thai equities continues to decline, recently falling to 24.2%.
Several negative factors weighing on the Thai bourse are now easing, such as a temporary pause in the Middle East conflict, expectations that Thailand's 2026 fiscal budget bill will pass, and limited economic fallout from rising tensions along the Thai-Cambodian border.
The main lingering concern is the outcome of trade negotiations with the US, said Mr Therdsak.
If Thai exports remain subject to a 36% tariff, the impact on listed company earnings could be limited to around 1%.
However, if the tariff is reduced, there is significant upside potential for the Thai stock market, he said.