The Stock Exchange of Thailand (SET) slipped further below 1,500 points this morning, hovering around 1,475 after several days in the red. Investors are weighing a range of macro headwinds: a global tech sell-off, uncertainty surrounding the US midterm elections, and closer to home, policy risk hanging over energy stocks. Electronics stocks have also lost ground as weak earnings dented sentiment.
In an interview with THE STANDARD WEALTH, Sorapol Veerametheekul, assistant managing director and head of investment strategy at Kasikorn Securities, said energy and electronics stocks accounted for about half of the index’s recent drop.
According to Trinity Securities, the electronics index (ETRON) fell 16% in the week from 26 October to 2 November. DELTA led the drop, down 17%, followed by CCET, down 13%. The energy index (ENERG) fell 3%, with refiners BCP and TOP down 11% and 10% respectively.
Meanwhile, ongoing tensions in the Middle East and US midterm Elections are driving a shift from stocks to bonds, highlighting macro factors affecting the SET as sentiment shifts. According to Sorapol, tensions and pending mid-term results have triggered a rotation out of equities and into bonds, as markets view the results as a potential risk for the stock market.
Latest results from global tech giants such as Meta, Google and Intel also revealed several weak spots in revenue, cash flow or guidance.
It’s worth watching the impact of today’s US midterm election results, with the Democratic Party set to take control of Congress amid victories in long-considered Republican states, flipping seats in Ohio, North Carolina and South Carolina.
Now, the impact on Thailand’s SET is less about a Democratic victory and more about what a blue sweep would mean for US policy. If US stocks seem riskier in the short term, investors typically move into safe havens such as bonds, signaling a rotation rather than a fundamental sell-off. During times like this, global funds typically scale back from emerging markets like Thailand as well.
From a policy perspective, Thanavath Phonvichai, president of the University of the Thai Chamber of Commerce (UTCC) and chairman of advisers at its Center for Economic and Business Forecasting, said the US midterm results need close monitoring. The winning party will shape how the US is governed and how much of its agenda the administration can push through.
A Democratic sweep of both chambers would send an important political signal and put the Trump administration under greater pressure from both politicians and the public, especially over policies affecting the economy and people’s livelihoods. For Thailand, the midterm results and the direction of US trade policy directly affect negotiations over the Agreement on Reciprocal Trade (ART) with the United States. This is key for Thailand to remain competitive against ASEAN peers.
Meanwhile, the third-quarter GDP report from the Office of the National Economic and Social Development Council (NESDC) will play an important role in market movements. If the NESDC revises its GDP forecast, it will boost the index, as markets have yet to price this in.
The SET has been through a positive cycle this year, with foreign investor inflows reaching about 70 billion baht.
Key Takeaway
The slip below 1,500 comes amid a strong year for the SET, where investor confidence in government stability and policy continuity were key contributors to inflows into the index.
Amid growing global uncertainty and geopolitical challenges, investors are moving towards safer assets such as bonds. Thailand’s ability to remain resilient amid an increasingly fractured world will be key in maintaining this year’s positive streak for the market.
Meanwhile, Thai investors and businesses will be watching political developments in the US closely, as foreign policy and trade remain key drivers of investor sentiment.
