August 8, 2024
BANGKOK – Deputy prime minister and finance minister Pichai Chunhavajira stressed that the Stock Exchange of Thailand’s performance was in line with global market movements and not indicative of any underlying issues with the Thai economy.
“The Thai stock index has been hovering around the 1,300-point level, reflecting investor uncertainty,” he said. “We must wait for both domestic and external conditions to improve gradually.”
He added that progress on the ESG fund was on track, with cabinet approval secured and a full launch expected in October.
Vathan Jitsomnuk, director of Strategic Analysis at Pi Securities, also attributed the SET’s decline to mounting concerns about a US recession, triggered by an inverted yield curve and weaker-than-expected US labour market data.
“The recent rally in the US stock market, particularly in the technology sector, may have prompted profit-taking,” he said. “Investors are closely monitoring the possibility of a hard or soft landing for the US economy. While hopes for a larger interest rate cut from the Federal Reserve have grown, this remains uncertain.”
European markets also experienced significant declines, with the CAC 40 and DAX indices falling by around 3%. The Japanese Nikkei index dropped by approximately 13-14%.
Historically, recessions have typically lasted less than a year, and the Federal Reserve is expected to implement measures to support the economy. However, with the Fed having recently held a meeting, immediate policy changes are unlikely.
Thai stocks have reached a nearly four-year low, and while they may appear cheap, further declines are possible. Investors are advised to adopt a cautious approach until there is greater clarity on the economic outlook.