Overseas investors bought $3.8 billion in Thai stocks

During a period of global market volatility, Thailand’s stability appealed to overseas investors who purchased over $3.8 billion in Thai equities during the first nine months of this year. Investors expect the post-pandemic tourism recovery to power the Kingdom’s economy during the final quarter.

Other factors that have drawn investors to Thai stocks are rising interest rates in the U.S. and an expected increase in shipments from the Kingdom’s export-oriented economy. Rising rates have caused Thailand’s currency, the baht, to cede value compared to the U.S. dollar. That, in turn, effectively lowers the price of Thai exports, making them more competitive in world markets.

The weaker baht also make Thai equities a better bargain, as their prices are more affordable for overseas investors using dollars to buy them.

“The strong dollar tends to make Southeast Asian currencies, including the baht, continue to depreciate, but in the first nine months, quite a lot of investments have moved into the Thai stock market, and the index has been relatively less volatile when compared with other stock indices,” said Soraphol Tulayasathien, Senior Executive Vice-President at the Stock Exchange of Thailand (SET).

“Continued interest rate hikes will have a huge impact on the global economy, especially affecting liquidity, tighter financial conditions, raising the cost of borrowing globally, and slowing global growth,” he added.

Thailand’s central bank has a high level of foreign reserves, so it has been able to keep interest rates low. The low rates have helped sustain the post-pandemic business recovery. Thai companies are also attractive to investors because they have taken a cautious approach to debt and so are generally financially strong and able to weather a crisis, according to the SET President Pakorn Peetathawatchai.

Photo courtesy of https://classic.set.or.th/set/