Despite the easing US inflation, a signal of longer-than-expected fight to bring inflation back to target range stokes concerns that the Federal Reserve (Fed) will continue tightening monetary policy for an extended period. With the robust US labour market, investors are bullish on no landing scenario which suggests the world’s largest economy will entirely avoid recessions and this affects capital flows in the region.

Senior Executive Vice President of The Stock Exchange of Thailand (SET) Soraphol Tulayasathien said that several stock markets in the region saw capital outflow in February due to the stronger US dollar propelled by the higher interest rate expectation. The Thai stock market was in this camp with foreign investors turning net sellers. The National Economic and Social Development Council announced the slower-than-expected Thai economic growth, weighed by declines in export growth and public consumption though domestic consumption recovery remains on track.

Key highlights for February

• At the end of February 2023, the SET Index decreased 2.9 percent from the previous month to close at 1,622.35 points, moving in the same direction as its regional peers. The benchmark index also went down 2.8 percent from the end of 2022.
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• Technology, Consumer Products, Agro & Food Industry, Property & Construction, and Services industry groups outperformed the SET Index in the first two months of 2023.
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• SET’s and Market for Alternative Investment (mai)’s average daily trading value in February dropped 32.3 percent from the same period a year before to THB 67.07 billion (approx. USD 1.91 billion). For the January-February period, both bourses’ daily trading value averaged THB 69.60 billion. Foreign investors snapped a four-month net buying streak in February, becoming net sellers to the tune of THB 43.56 billion. However, their trading ratio remained higher than any other types of investors for 10 straight months.
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• In February, there were five newly-listed companies on SET and two companies on mai, making the Thai stock markets retain position among the largest IPO venues in Asia.
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• The Thai stock exchange's forward P/E ratio at the end of February 2023 stood at 15.5 times, above the Asian stock markets' average of 12.2 times. The historical P/E ratio was 18.9 times, exceeding the Asian stock markets' average of 13.4 times.
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• Dividend yield ratio at the end of February 2023 was 2.82 percent, below the Asian stock markets' average of 3.09 percent.

Derivatives market

In February, Thailand Futures Exchange (TFEX)'s daily trading volume averaged 543,831 contracts, up 2.5 percent from the previous month largely due to the decline in trading volume of SET50 Index Futures. For the first two months of 2023, TFEX’s daily trading volume dropped 5.1 percent over the same period to 536,966 contracts.