Bangkok Stocks Crash: Four-Year Low, Economic Storm Brews
BANGKOK—The Thai stock market plummeted this week, reaching its lowest point since November 2020. This sharp decline, driven by a sell-off in key stocks and growing economic concerns, saw the benchmark SET index dip to 1,237 points—a level unseen since the depths of the COVID-19 pandemic. Investors grappled with disappointing corporate earnings, global economic headwinds, and persistent domestic challenges.
The downturn was significantly fueled by declines in industry giants Delta Electronics (DELTA) and Airports of Thailand (AOT). DELTA’s share price fell sharply after reporting earnings approximately 50% below market expectations. This, coupled with existing legal expenses and weak growth projections, triggered a rapid sell-off. AOT, a bellwether stock, faced downward pressure due to anxieties surrounding the financial stability of King Power, its primary duty-free contractor. Rumors of potential liquidity problems at King Power, and the potential impact on AOT’s concession revenue, worried investors, despite AOT’s assurances that it has no plans to alter the minimum guarantee in the duty-free concession agreement.
This widespread sell-off stemmed largely from fund managers adjusting portfolios and mitigating losses from short-selling. However, some foreign investors began re-entering the Thai market, anticipating a rebound and engaging in short-covering, particularly in heavily discounted blue-chip stocks.
The final wave of fourth-quarter 2024 earnings reports is due this week, with several influential companies, including CPALL, CPF, and KCE, yet to announce their results. These announcements, along with upcoming analyst meetings, will provide crucial insights into the corporate outlook for the remainder of the year. Market observers will closely monitor these developments for signs of stabilization or further decline.
The SET index is projected to fluctuate between 1,240 and 1,280 points in the near term, subject to both domestic and international factors. Global factors, such as the evolving US-China tech rivalry—highlighted by a recent meeting between President Xi Jinping and Chinese tech leaders—could contribute to market volatility. Domestically, the Thai government’s efforts to stimulate the economy, including potential new tax-saving funds and the third phase of the digital wallet program, may offer some support.
However, significant challenges remain. Thailand’s 2024 economic growth of 2.5% fell short of projections, raising concerns about the effectiveness of previous stimulus measures and the persistent burden of high household debt. Private investment also contracted for the third consecutive quarter, particularly in the auto industry, further darkening the economic outlook. Analysts predict a further deceleration in GDP growth to 2.4% this year, citing global trade uncertainties, constrained consumer spending, and the influx of competitively priced goods from China.
Adding to the complexity, the upcoming MSCI rebalancing at the end of February will see several prominent Thai companies shift between indices. PTTGC and TOP will be downgraded from the MSCI Global Standard Index to the MSCI Small Cap Index, while GPSC and SCGP will be added to the Small Cap index. This reshuffling could trigger further trading activity and potentially impact market sentiment. The confluence of these factors creates uncertainty for the Thai stock market, leaving investors cautiously navigating a challenging landscape and seeking positive signs amidst the downturn.
