If a year is a long time in politics, it is an eternity in the financial markets. Less than 12 months ago, Thailand was celebrating its status as one of Asia’s best-performing stock markets.

This was even allowing for military coup and geopolitical uncertainty that had driven such volatility within the country, as Thailand’s SET index rallied 19.32% and came second only to the Karachi 100 in Pakistan.

This rally has dwindled considerably, however, with Thai stocks up by just 5.2% at the beginning of January.

In fact, the first two financial quarters have seen the nation’s stock market plummet to become the second-worst performing in Asia, while this decline has also triggered an economic slump that may be hard to recover from.

How Thailand’s Fortunes Have Changed in the Last Year

Of course, some will argue that the seeds for such depreciation were sewn at the height of financial market growth last year, has debt levels soared and company valuations grew at a disproportionate rate.

These fears have been realised in the New Year, particularly as bad loans have begun to weigh heavily on investor sentiment.

The Bangkok Bank and Krung Thai Bank led domestic lenders in reporting a rise in non-performing loans between January and March, which in turn prompted stern warnings from brokerage outlets such as Nomura Securities Co and the Goldman Sachs Group.

Online brokerage firms and trading portals also raised concerns, with investor activity levels declining and the level of sentiment among companies also depreciating.

To cap this sudden and inescapable slide, the benchmark SET index also fell by as much as 1.2% last week, with disappointing quarterly results largely behind this.

The state of the marketplace and falling business sentiment is beginning to hit the economy hard too, with the World Bank having revised its growth projections to just 3.3% per year between 2017 and 2019.

This is the weakest among all eight developing South East Asian nations, with the Philippines and Indonesia set to record annual growth during the same period of 6% and 5% respectively.

The Bottom Line: Can Thailand Recover From Its Economic and Financial Market Malaise?

For some, last years’ figures and economic performance were mere anomalies, which did little more that mask the true sate of the marketplace.

In fact, there is a strong belief that Thailand’s decline began in earnest when the military seized power three years ago, as this had the cumulative effect of restricting competition, hindering growth and driving a monetary policy that is incapable of stimulating the economy.

Over time, these measures have taken hold and left the nation struggling to compete with even less well-resourced contemporaries.

Thailand’s general leaders are taking steps to resolve this issue, however, primarily by conceiving and driving a number of infrastructure projects throughout the nation.

The pick of these is the $5.2 billion high-speed rail venture with China, while significant investment in innovation, technology and advanced industries are sure to drive longer-term growth.

These remain a work-in-progress for now, however, meaning that the government may be forced to take more effective, short-term steps if they are to achieve their objectives.

About the author

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

You May Also Like

BoT to explore yuan-baht settlement for Thai-Chinese trade

According to an ADB report, the majority of the significant Southeast Asian emerging markets’ outstanding foreign debt securities have been denominated in dollars for the past few years.

Thai Industries Sentiment Index drops for two consecutive months in May 

The Federation of Thai Industries (FTI) Chairman attributed the decline to global economic uncertainties, high production costs, policy interest rate rises, and concerns over the new government

Thailand’s ranking in the Global Innovation Index (GII 2023) remains unchanged at 43rd

Thailand’s ranking in the Global Innovation Index has remained stagnant at 43rd for three consecutive years due to a lack of human capital and unfavorable regulatory environment.