Thailand’s long-underperforming stock market is emerging as a preferred choice among foreign investors, following a wave of capital outflows from Indonesia sparked by political unrest and changes in its finance ministry. In September, Indonesia’s market saw $653 million in foreign withdrawals—the most significant exodus since April—while Thailand experienced a sharp slowdown in foreign selling.
Investor sentiment is shifting as Thailand’s political situation stabilizes with the appointment of a new prime minister and promises to revive economic stimulus measures. The baht has climbed about 2% against the dollar this month, topping Asian currencies, and the SET Index rose over 4% to a seven-month high. Foreign sales of Thai stocks dropped dramatically to just $21 million so far in September after heavy August outflows.
Asset management firms such as Aberdeen Investments and Valverde Investment Partners now favor Thai stocks, highlighting their attractive valuations and the country’s solid fiscal position, which allows room for economic stimulus. “This is an opportunity to overweight Thailand amid an improving political and economic climate,” said John Foo of Valverde.
In contrast, Indonesia’s abrupt finance minister change and rising political uncertainty have rattled markets and investors, raising concerns over fiscal policies and the country’s economic outlook. The rupiah has weakened further, making it one of Asia’s worst-performing currencies in 2024.
With inflows returning and political risks easing, analysts believe Thailand’s stock market offers relative stability and upside potential compared to its regional peers facing turmoil.
Year-to-date (12 September), foreign investors have net sold $3,766 million in the Indonesia’s Jarkata Exchange, whereas foreign investors accounted for 38% of the trading so far. The market PER is currently traded at 13.90x, while the market PBV is at 2.31x.
In the meantime, Thailand saw an outflow of 85,701 million baht (approximately $2,558 million) (THB33.5 to USD1) this year. Meanwhile, the country only saw 1,414 million baht of outflow this month (approx. $42 million). Thailand’s SET Index is trading at 16.93x PE and 1.23x PBV.
