The Thai stock market has faced significant pressure in the first five months of 2024, with foreign investors offloading over 89 billion baht worth of shares amid concerns over a slowing economy and political uncertainty. This has resulted in a 6.2% decline in the SET Index.
Mr. Chaiyaporn Nompitakcharoen, Managing Director of Bualuang Securities (BLS), expressed concerns about the outlook for the Thai stock market in the second half of 2024, citing a lack of investor confidence due to various risk factors.
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Risk Factors Weighing on Thai Stocks
- Slow Economic Recovery: Delayed budget disbursement, slowing exports, and weak domestic consumption could lead to lower-than-expected economic growth in the second half of the year.
- Political Uncertainty: The delayed formation of a new government and ongoing political uncertainty may affect investor confidence.
- Global Economic Slowdown: The ongoing trade war between the US and China, as well as oil price volatility,could impact the global economy and, consequently, Thai exports.
Diversification as a Risk Mitigation Strategy
Mr. Chaiyaporn recommends that investors diversify their portfolios across various asset classes to mitigate risks.Investors with a higher risk tolerance may consider investing in foreign stocks, such as those in the US, India, and Vietnam, which have shown promising growth prospects. Meanwhile, investors with a lower risk tolerance may opt for corporate bonds or fixed-income instruments.
Investment Opportunities
Despite the overall gloomy outlook, BLS sees potential investment opportunities in specific sectors like petrochemicals,electronics, and finance, which could benefit from sector-specific tailwinds.
“We maintain our SET Index target of 1,539 points for the end of 2024, but we advise investors to diversify their portfolios to mitigate the impact of market volatility,” said Mr. Chaiyaporn.
The Thai stock market faces challenges in the second half of 2024 due to various risk factors. Investors should closely monitor the situation and adjust their investment strategies accordingly to their risk tolerance.
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