Thai SET index hits a five-year low amid ongoing political turmoil

The Stock Exchange of Thailand (SET) index has hit a five-year low, driven primarily by political turmoil and economic uncertainties. On June 19, 2025, the SET index fell 2.4%, marking its lowest close since March 2020, with a year-to-date decline of nearly 24%, making it the worst-performing major bourse globally.

The trigger was the exit of Bhumjaithai, the second-largest party in the ruling coalition, citing a loss of trust after a leaked call between Prime Minister Paetongtarn Shinawatra and former Cambodian leader Hun Sen, which raised concerns about Thailand’s diplomatic and resource management. This political instability has fueled fears of a potential government collapse or House dissolution, further eroding investor confidence.

Analysts warn the SET could drop below 1,000 points, a level not seen in over a decade, with political uncertainty outweighing earlier concerns like U.S. tariff fears and Middle East tensions. Thai stocks are trading at historically low valuations, with a price-to-earnings (P/E) ratio of 11 (down from 17 five years ago) and a price-to-book value (P/BV) yielding 6%, alongside dividends of 4-5%. Despite these attractive metrics, investor sentiment remains fragile, with both local and foreign investors selling off due to ongoing political risks. The best-case scenario, according to analysts, would be the prime minister’s resignation to allow a new leader to stabilize the government, while a House dissolution is seen as detrimental to the market.

Other factors contributing to the decline include a sluggish economy, weaker-than-expected tourism, and concerns over U.S. economic policies under President Trump, such as tariffs and tax changes. The Thai government’s earlier $4.5 billion Vayupak Fund injection and tax incentives have failed to stem the decline, with foreign investors pulling out $4.2 billion from Thai equities in the past year. Trading volume has been low, reflecting cautious investor behavior amid the uncertainty. Experts recommend waiting for political clarity before investing, as the market faces significant downside risks.