(Bloomberg) — An ambitious campaign to revive Thailand’s battered stock market is falling flat, as entrenched pessimism about the economy accelerates a foreign funds exodus.
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Seven months after $4.5 billion was newly injected into the Vayupak Fund, analysts have been left perplexed by how little it’s helped the benchmark SET Index. The stock gauge has tumbled more than 16% this year, making it the world’s worst performer among 92 indexes tracked by Bloomberg. Over the past 12 months, foreigners pulled out $4.2 billion, the most across Southeast Asia.
At the heart of weak investor sentiment is a lack of confidence that policymakers will be able spur the economy beyond tourism, as well as deep-rooted concerns about high household debt, political uncertainties and corporate scandals. US President Donald Trump’s tariff war is adding to the headwinds as a stronger dollar has forced investors to flee from emerging markets.
Read: Thailand Offers Tax Incentives to Bolster Slumping Stocks
“Most people realize our equities are trading at very cheap valuations, but it’s very hard to convince them to invest in stocks now with poor sentiment and a weak economic outlook,” said Narongsak Plodmechai, chief executive officer at SCB Asset Management Co. The government has “demonstrated its serious intention to rescue the stock market, but there should be more urgent steps to support the market,” he said.
The faltering rescue plan — which aims to revive the stock market by investing into local firms — is offering policymakers and investors a warning about the ability of state-run investment funds to spur markets. What Thailand’s government does next will determine its status among market peers.
When authorities announced fundraising for Vayupak last August, analysts lauded the news, with Goldman Sachs Group Inc. upgrading Thai stocks on expectations it would help attract foreign capital. Political instability and poor corporate earnings had roiled Thailand’s markets for much of 2024, and officials pinned their hopes on a stock market renaissance on the fund.
The market rallied for a while before the challenges set in. Government data showed that Thailand’s household debt pile remained stubbornly high. Economic growth was also coming in below most forecasts, with 2024 marking the slowest growth rate among its Southeast Asia peers. Consumption and manufacturing sectors were also showing signs of slowing.
Source: World’s Biggest Stock Rout Deepens as Thai Market Rescue Falters
