Progress of U.S. debt

Editorial Staff

Progress of U.S. debt ceiling negotiations eased investor concerns

Progress of U.S. debt ceiling negotiations eased investor concerns while the Federal Open Market Committee (FOMC)’s meeting signaled that rate pause is on the cards.

These positive factors bolster global sentiment as investors forecast that financial costs will marginally increase from the current level. Given that the Thai economy is bounding back and risk of inflation is limited, the Bank of Thailand is expected to keep the gradual pace of rate hike.

Senior executive vice president of the Stock Exchange of Thailand (SET) Soraphol Tulayasathien said that fund outflows from Thai bond and equity markets which started to be seen in May is expected to be short-lived following the election results as investors are concerned about the formation of the new government and the change in economic policy.

Investors are closely monitoring the situation and analysts are optimistic that foreign fund flows will be reversed if the new government policies do not affect the country’s competitiveness and push operating costs higher. Moreover, SET’s forward price to earnings ratio (P/E) was still below the average in the past and this encouraged individual and local institutional investors to buy with a net position for the January-to-May period.

At the end of May 2023, the SET Index rose 0.3 % from the previous month and decreased 8.1 % from the end of 2022 to close at 1,533.54 points, in line with other market indices in ASEAN. Industry groups that outperformed SET index when compared with the end of last year comprised technology, consumer products, financials, services, and property and construction.

In May 2023, SET’s and Market for Alternative Investment (mai)’s average daily trading value dropped 31.6 % from the same period a year before to 54.19 billion baht (approx. USD 1.58 billion). Both markets’ trading volume averaged 60.93 billion baht a day for the first five months of 2023. Foreign investors were net sellers for the fourth straight month to a tune of 33.41 billion baht in May. However, their trading ratio remained higher than any other types of investors for 13 straight months.

In May, there was one newly-listed company on SET: G-Able pcl (GABLE). The Thai stock exchange’s forward P/E ratio at the end of May 2023 was 16.1 times, above the Asian stock market’s average of 12.5 times. The historical P/E ratio stood at 20.8 times, exceeding the Asian stock market’s average of 14.1 times.

Dividend yield ratio at the end of May 2023 was 3.17 %, below the Asian stock market’s average of 3.46 %.