Louisianainvesting in Thailand's Stock Market: What You Need to Know
Uncertain Times, Hidden Opportunities
Thai ESG Index Surpasses Market Performance Despite ThaiESGX Slowdown; Long-Term Prospects Remain Optimistic
Investing in Thailand's stock market can be tricky, what with the uncertainties lurking around. But that doesn't mean it's a lost cause. Let's dig in and see if there's some gold to be found.
Stagnant, but Shining in the Long Haul
The Thai stock index isn't exactly setting the world on fire recently. With various pressures and challenges threatening, some instances have seen a stagnant or declining index. But remember, tides change, and these challenges present long-term investment opportunities.
One index, the SETESG, has seen a 14.98% decline since the start of the year (as of May 27, 2025). However, it still outperformed the SET Index, which dropped by 16.91%, and the SET50, which dropped by 16.28%. The SETESG managed to gain 2.3% over the past month, nearly matching the SET Index's 2.2% rise, signifying a competitive performance.
The Secret Sauce for Its Success
The relatively strong performance of the SETESG can be attributed to an inflow of funds into ThaiESGX, though it may not reach its target of 10 billion baht. Funds are shifting from Long-Term Equity Funds (LTFs).
Eye on the Horizon
Piriyaphon Kongwanich, Director of Fundamental Analysis at Bualuang Securities, pointed out that both stock indices are under pressure from the U.S. trade war. Concerns over U.S. debt have led to higher bond yields, squeezing the stock market. However, he believes the market will rebound by the end of Q3 and Q4 of 2025.
Investing in ESG (Environmental, Social, Governance) stocks can bring long-term benefits. Companies within the SETESG index tend to have more sustainable growth and draw investors who prioritize environmental, social, and governance factors. Prominent stocks in the SETESG include ADVANC, GULF, KTB, OSP, and SCC.
Shifting the Focus
Jitipol Puksamatanan, Assistant Managing Director and Head of Global Investment Strategy at Finansia Cyrus Securities Plc, noted that the SETESG index's smaller drop compared to the SET index suggests that ESG stocks have the potential to outperform the broader market, especially in long-term businesses with lower risks.
Although the impact of the ThaiESGX fund might be limited, the government expects new inflows of around 20 billion baht, spurring the growth of green stocks in the SETESG index, including sectors like banks, retail, and real estate.
Caveats and Opportunities
Ratasak Piriyanont, Senior Director at Kasikorn Securities, warned that the earnings outlook for these sectors in the second half of 2025 could slow down. Banks may face repercussions from declining loan growth and rising credit costs, particularly for SMEs and mortgages. The retail sector is expected to see a slowing consumption in the second half, with same-store sales growth (SSSG) in Q2 2025 continuing to slow from Q1. The real estate sector faces weak demand for housing, with banks tightening lending standards to reduce non-performing loans.
On the flip side, the Thai ESGX fund allows investment up to 20% in alternative assets, with stocks like PR9, OSP, GULF, CK, and BCPG anticipated to show strong earnings growth in the second half of 2025.
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- Stock Exchange of Thailand
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Overall:
Finding potential investments in Thailand's stock market can be a worthwhile venture. Despite facing challenges, ESG stocks in the SETESG index have shown resilience with strong performances and have the potential to outperform the broader market. Key companies in the SETESG index include ADVANC, GULF, KTB, OSP, and SCC. The Thai ESGX fund, which aims to promote sustainable investment, is expected to attract significant investments, especially with the shift from LTFs to ESG-focused funds. Sectors like banks, retail, and real estate are expected to see increased weightings in the SETESG index, although their earnings outlook for the second half of 2025 is cautious. The Thai ESGX fund can invest up to 20% in alternative assets, with stocks like PR9, OSP, GULF, CK, and BCPG projected to show strong earnings growth in the second half of 2025.
- Despite uncertainties, investing in Thailand's stock market, particularly in ESG stocks within the SETESG index, presents long-term opportunities due to their sustainable growth and potential to outperform the broader market.
- The relative strength of the SETESG index can be attributed to an inflow of funds into ThaiESGX, with key companies such as ADVANC, GULF, KTB, OSP, and SCC are prominent in this index.
- Shifting focus to long-term equity funds (LTFs) and ESG-focused funds could potentially lead to a significant increase in investments in the Thai ESGX fund. This shift, in turn, is projected to boost the growth of green stocks in the SETESG index, including sectors like banks, retail, and real estate.
- While sectors like banks, retail, and real estate in the SETESG index are expected to see some challenges in the second half of 2025, stocks like PR9, OSP, GULF, CK, and BCPG are anticipated to exhibit strong earnings growth in the same period, providing a potential avenue for investors searching for opportunities in Thailand's stock market.
