Once heralded as a beacon of emerging market growth, the Thai stock market recently witnessed a steep decline, dragged down by a weak macroeconomic outlook and heavy dependence on China.
However, it is not all doom and gloom.
In fact, the current downturn may present an opportunity for investors to buy shares at a discount.
Introducing Thailand’s SET Index
The Stock Exchange of Thailand Index (SET) is the country’s bellwether stock market index.
This index is used mainly as a benchmark for the performance of Thai’s stock market and economy.
Source: S&P Global Market Intelligence
The SET index had a rough start to 2024, dipping by over 4.5% year to date (YTD).
In comparison, other markets, such as Singapore’s Straits Time Index (SGX: ^STI) and USA’s S&P 500 Index (SPX: IND) have climbed over 2% and 6.8%, respectively.
A surge in interest rates and lack of government stimulus have resulted in a pessimistic outlook for the market.
With high household debt and low export numbers, corporate earnings have declined by over 11% over the past year.
Are we at the bottom yet?
A glimmer of hope has emerged as the Thai government recently approved a 500 billion baht stimulus package aimed at spurring demand.
Similarly, the finance ministry is eyeing a 0.25 percentage point reduction in interest rates by the end of the year, helping to ease financial pressure.
Thai export numbers are also witnessing an uptick, with a 3.6% year-on-year growth for February 2024.
These data points indicate increased domestic and foreign demand for Thai products, suggesting a potential recovery may be on the cards.
Singapore depository receipts
As of last month, five Singapore depository receipts (SDRs) linked to Thailand’s blue chip companies were listed on the Singapore Exchange (SGX: S68), bringing the total SDRs to eight.
There are two key benefits of investing through SDRs.
1. SDRs are traded in Singapore Dollars, thereby preventing the need for Singaporeans to exchange currency.
2. Convenience and Accessibility – Grants Singaporeans the ability to invest in foreign markets directly, without incurring additional fees.
The 8 SDRs that you can invest in
Here is a summary of the eight SDRs that are available for you to invest in on the Singapore Stock Exchange.
Advanced Info Service (SGX: TADD) is Thailand’s largest telecommunication operator, with a market cap of S$22.6 billion, serving over 40 million individuals countrywide.
The telecom giant saw a 25% surge in profit over the last quarter despite a sluggish economy.
Airports of Thailand (SGX: TATD) manages airports and provides services related to air transportation, serving both domestic and international flights.
As the Land of Smiles continues to count the tourism sector as a key driver of the economy, airports will also experience healthy growth.
CP All (SGX: TCPD) is the sole operator of all 7-Eleven convenience stores nationwide, which amounted to 14,545 outlets, according to Statista.
Delta Electronics (SGX: TDED) is the Thai arm of Taiwanese electronic components maker Delta Group.
With a market cap of S$31.6 billion, Delta Electronics seeks to maintain its foothold as it expands its innovative product offerings in key sectors such as electric vehicle chargers, industrial automation, and data centre infrastructure.
Gulf Energy Development (SGX: TGED) is in the business of electricity generation.
The energy firm is ramping up its renewable sector as domestic and international markets transit into green energy.
Kasikorn Bank (SGX: TKKD), winner of Thailand’s best domestic bank in 2023, is one of the most treasured banks in the nation.
The lender’s performance is expected to recover strongly due to lower credit costs and increased margins this year, making Kasikorn an attractive investment.
PTT Exploration and Production (SGX: TPED) is the country’s largest company with a market capitalisation of S$35.4 billion.
It is an upstream and downstream petrochemical company involved in petroleum exploration and extraction globally.
Furthermore, its flagship petrol station, “PTT Station” has an extensive outreach across Southeast Asia, with branches in countries such as Cambodia and the Philippines.
Siam Cement Group (SGX: TSCD) manufactures and sells a variety of products ranging from construction materials to chemicals and packaging units. It is Thailand’s largest industrial conglomerate.
Get Smart: Diversifying prudently
Investing in different countries’ stock markets offers a range of benefits.
Firstly, international diversification reduces geographical risk, offsetting losses in one market with another.
Secondly, investing abroad provides access to emerging economies such as Thailand, offering potentially higher returns compared with mature economies.
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Disclosure: Aw Kai Rui does not own any of the stocks mentioned in this article.
