Thai Stock Market Outlook
- The Thai stock market declined significantly in June 2025, with the SET Index dropping approximately 5.2% month-over-month and 22.2% year-to-date. This was driven by both external and internal negative factors affecting investor confidence.
- External Factors: The Israel-Iran conflict caused crude oil prices to surge, increasing inflation risks and potentially forcing the US Fed to delay interest rate cuts ("Higher for longer" policy), pressuring global risk assets. For Thailand's economy, a 10% oil price increase would impact GDP by 0.3-0.5% since oil represents ~10% of total imports (60% from the Middle East). It could also boost inflation by 0.2-0.4% as oil comprises 4-5% of the inflation basket. While energy stocks might benefit 2-4%, other sectors with high energy costs would face pressure (construction materials, contractors, transportation, power plants, retail, refineries).
- Internal Factors: Political uncertainty in Thailand remains a primary concern, potentially delaying the 2025/2026 budget. Government investment, representing 20% of total investment or ~4.7% of GDP, could stagnate. A 6-month budget delay would reduce investment disbursement by 30-40% from normal levels, or 50-60% if political unrest occurs, impacting GDP by -0.2% to -0.4%. Effects would be most evident in Q4 2025 to Q1 2026. Construction-related stocks represent ~1.2% of Thai market profits, with ~0.4% related to government investment, creating direct SET impact below 0.1% but significant indirect effects through reduced confidence affecting private consumption and investment.
- The Thailand-Cambodia conflict poses limited impact since Cambodia represents only ~3% of Thailand's exports, mainly gems, refined oil, sugar, beverages, and chemicals. Oil and gas exports to Cambodia are just 0.4% of total 2024 exports.
Investment Strategy and Recommendations
Despite volatility and economic slowdown, Thai stocks are attractively valued. The SET Index trades at Deep Value levels with Forward P/E around 13x (similar to COVID-19 period), while dividend yield has risen to 4.2% (higher than COVID-19). SET Index recovery is expected to be gradual, supported by US trade negotiations and BOT rate cuts, with potential to rise above 1,200 points.
The portfolio focuses on stocks with stable income, strong cash flows, and high dividend yields (power plants, banks, petrochemicals). Fund managers recommend gradual accumulation of Thai stocks.
For current unitholders: Hold positions to await economic recovery , targeting 1,200 points.
For new investors: Gradually accumulate on weakness, especially when SET Index falls below 1,100 - an attractive level for long-term investment.
-Please study the product features, conditions, returns, risks, and tax benefits in the investment guide before investing.
-Tax privileges are subject to the Revenue Department’s rules. Non-compliance may result in loss of tax benefits.
-Past performance and performance comparisons of capital market products do not guarantee future results.
