Foreign Investors Desert Thai Stocks Amid Political Turmoil and Economic Slump

Thailand's stock market has seen a mass exodus of foreign capital, with investors pulling out billions as political instability and lacklustre economic growth dim the country's appeal

 

Foreign investors have offloaded a staggering 80 billion baht from Thai equities since the start of the year, positioning Thailand as one of the world's worst-performing markets.

 

This significant divestment is largely attributed to the nation's subdued GDP growth, which has translated into disappointing corporate earnings compared to its regional counterparts. Lingering political uncertainties are also adding considerable pressure.

 

Since January 2025, overseas investors have persistently sold off Thai shares, with net sales now exceeding 78 billion baht.

 

This capital flight occurs against a backdrop of Thailand's slowest economic expansion in ASEAN and persistent domestic political instability.

 

These combined factors are severely eroding the attractiveness of the Thai stock market when compared with other regional exchanges.

 

Analysts suggest that while global investment trends are increasingly pivoting towards technology, Thai businesses largely remain rooted in the 'Old Economy'.

 

Ratasak Piriyanont, Senior Director of Analysis at Kasikorn Securities, told Krungthep Turakij that the substantial foreign sell-off since the year began underscores a significant "decline" in the Thai capital market's appeal compared to international markets.

 

He noted that Thai stocks are among the poorest performers globally, directly linked to the country's low GDP growth which has resulted in uninspiring earnings for listed companies.

 

Political factors, he reiterated, remain a critical concern.
 


 
 

Furthermore, Thailand's economic reliance on 'Old Economy' businesses is preventing it from catching up with global shifts towards the 'New Economy' or the technology sector.

 

This contrasts sharply with worldwide capital flows, which typically gravitate towards high-growth, technology-driven enterprises.

 


"In the past one to three months, Asian stock markets like China, Taiwan, and South Korea have experienced robust recoveries," Ratasakexplained. "South Korean stocks, in particular, saw a strong rebound after their elections early last month, leading to considerable capital inflows. However, Thai stocks continue to underperform other markets."


 

The Thai economy faces a high risk of a technical recession in the latter half of the year.

 

This stems from a substantial surge in exports during the first half, which could potentially lead to a reduction in orders in the second half.

 

This confluence of negative factors suggests that foreign investors are unlikely to return to the Thai stock market for the remainder of the year.

 

They are reportedly awaiting clear positive catalysts, which are currently nowhere in sight.

 

Apichart Phubanjerdkul, CISA Senior Director of the Strategic Analysis Division at TISCO Securities, indicated that foreign investors have been consistent net sellers of Thai equities since the beginning of the year, with total net sales reaching approximately 78 billion baht.

 

However, he now places less emphasis on foreign investment trends than previously, suggesting that these investors may be employing 'Robot' programmes for intraday profit-taking.

  



 

The daily net sales figures often represent profits foreign investors are making and closing out within the same day.

 

For instance, they might sell a stock at 100 baht and repurchase it at 85 baht, immediately realising a 15 baht profit. The reported negative net sales figures are a result of such profit-taking activities.

 

Despite the substantial volume of sales, it's worth noting that the proportion of foreign ownership in Thai stocks has not decreased, suggesting these are not outright divestments but rather profit-taking transactions recorded as net sales.

 

Monthly foreign investor sales figures from January to June are: January (11.3 billion baht), February (6.6 billion baht), March (21.8 billion baht), April (14.7 billion baht), May (16.1 billion baht), and June (8 billion baht).

 

Gun Hathaisattha, Head of Investment Strategy and Economist at CGS International Securities (Thailand), added that the overarching trend for foreign investors remains one of selling or not increasing their holdings.

 

He cited two primary reasons for this continued sell-off or slow investment in the Thai stock market: firstly, Thailand's economy exhibits the lowest growth in ASEAN, with the University of the Thai Chamber of Commerce forecasting 1.7% growth and the Bank of Thailand predicting 2.3%; and secondly, ongoing political uncertainty, with July expected to be marked by several significant political events.

 

Political factors are widely seen as a drag on the stock market for the next one to three months, with the SET index targeted at 1,200 points. Gun believes that foreign investors will continue to be net sellers and are unlikely to become net buyers again in the near future.

(2025/07/01-00:00)