Construction Stocks in Thailand Poised for Rally as Fiscal Budget Approval Nears

Investors are eyeing potential gains in the construction and material sector on the Stock Exchange of Thailand, anticipating a rally fueled by expectations surrounding the impending approval of the long-awaited 2024 fiscal budget. With the budget having faced over six months of delays, the sector stands poised for a resurgence.

The stalling of numerous construction and infrastructure projects since October 2023, stemming from the prolonged budget approval process, has significantly impacted the sector’s performance. However, a ray of hope looms on the horizon as disbursements are anticipated to kick off by late April or early May, injecting a considerable influx of funds within a limited time frame of five months before the onset of the new fiscal year on October 1st.

The anticipated surge in funding is poised to revitalize construction companies, many of which have grappled with dwindling backlogs during the prolonged hiatus. SETCO, the Construction and Material Sector on the SET Index, Thailand’s primary stock exchange, has notably lagged behind the broader market index in the past half-year. Over this period, SETCONS experienced an 11.25% drop while the SET Index registered a 6.21% decline.

In a broader context, Thailand finds itself trailing behind its regional counterparts this year, primarily attributed to lackluster global demand impacting export growth and sluggish consumption resulting from the protracted fiscal budget delays. As the approval of the 2024 fiscal budget nears, market sentiments are primed for a potential reversal, with construction stocks poised to lead the market resurgence and drive economic activity in Thailand.