Thailand’s stock exchange plans to woo inflows from pension and sovereign-wealth funds in Japan and China as it strives to revive investment from abroad.
The pitch will highlight the way Thai companies offer access to the investment theme of emerging Southeast Asia, since they derive earnings from neighbors such as Cambodia, Myanmar and Vietnam, according to Pakorn Peetathawatchai, a senior executive vice president at the Stock Exchange of Thailand.
“Thailand received a lot of foreign-direct investment from Asia, but a very small amount of investment into the stock market,” Pakorn said in an interview in Bangkok on Monday. “We’re not just a single-country story. We should go and get more Asian funds to invest.”
Thailand’s SET index was the only Asian market to rally Tuesday, climbing to the highest since 2015 despite a global flight to haven assets after North Korea fired a missile over Japan. Faster economic growth and an easing of some domestic political unease are spurring speculation about a comeback for Thai stocks, which missed out on this year’s emerging-market equity surge.
“Foreign ownership of Thai stocks is unusually low,” Pakorn said, adding that overseas participation is down to about 30 percent of the market from as much as 40 percent.
International investors have withdrawn about $7 million net from Thailand so far in 2017, the only efflux among 11 Asian economies tracked by Bloomberg. After yesterday’s advance, the SET index is up 4.6 percent this year, but that’s still the worst performance among Asian benchmarks after Pakistan and Sri Lanka.
Risks for investors include currency appreciation in an export-dependent economy, a climb in bad debt and the nation’s tangled politics.
Former Prime Minister Yingluck Shinawatra, whose government was ousted in a coup in 2014, probably fled the country last week ahead of a court verdict that could have led to a 10-year jail sentence. The looming ruling had stoked concern of possible unrest among her supporters.
Investors who worried the verdict would lead to violence can now turn their attention to improving domestic economic fundamentals, according to Prinn Panitchpakdi, Thailand country manager at CLSA in Bangkok.
Even so, the political path forward for Southeast Asia’s second-largest economy remains murky. General Prayuth Chan-Ocha seized power in 2014 after a period of unrest, pledging to restore stability.
A return to democracy is expected next year, but a firm date has yet to be set. Thailand has endured about a dozen coups since putting an end to absolute monarchy in 1932.
“Political stability is quite important,” said Shinji Kunibe, general manager and head of fixed-income at Daiwa SB Investments Ltd. in Tokyo. “On that front, there’s lingering concern about potential unrest in the long term.”
— With assistance by Yumi Teso
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