Krungsri Securities Strategist expects significant foreign fund flows into Thai equities, as the latest MSCI Indonesia update signals further outflows from Indonesian stocks and rotation into ASEAN Emerging Markets—particularly Thailand.
The broker notes that active funds holding MSCI Indonesia stocks have decreased their allocation from 1.9% to 1.5% by the end of February 2026, still higher than MSCI EM’s reduced benchmark weight of 0.9–1.0% (previously 1.1%). This suggests accelerated selling pressure remains as portfolios adjust.
Indonesia remains at risk of underestimating the impact of its low free float. Clarity on the issue is expected this month, with several stocks potentially falling below MSCI’s minimum requirement. Should this happen, Indonesia’s weight in MSCI EM may drop to 0.6–0.8%, prompting further passive fund outflows around May 2026. In a worst-case scenario, if Indonesia is downgraded to Frontier Market status, capital flight could intensify.
Foreign investors are now underweighting Indonesia, redirecting capital to other ASEAN EMs. Thailand, offering high liquidity, is positioned as the main recipient for nearly $10 billion seeking new opportunities across the region.
KSS notes that the SET Index has already priced in Middle East risks and looks attractive for medium-term accumulation, given inflows from MSCI Indonesia rotation and improved valuations. Focus sectors and stocks include:
- Energy & Power: PTT, GULF, GPSC
- Industrial Estates: AMATA, WHA
- Telecommunications: ADVANC, TRUE
- Banking: KTB, KBANK
Particular emphasis is placed on PTT, GULF, ADVANC, TRUE, and KTB as prime beneficiaries. These large-cap Thai names are poised to gain from continued foreign inflows and broader rotation themes, with risk-reward profiles supporting accumulation at current levels.
