Foreign investors return to Thai stocks in July, pushing market value above 11 billion baht

Foreign investment in Thai stocks surges to over 11 billion baht in July, despite trade talks uncertainty with the US, suggesting positive market sentiment.

Despite a dip in the SET Index on July 22, which fell by 16.38 points to 1,191.75, a 1.36% decrease, with a trading value of 49.01 billion baht, foreign investors have continued to show interest in Thai stocks throughout July.

From July 7-22, foreign investments in Thai equities totalled 11.06 billion baht, with a net purchase of 1.82 billion baht recorded on July 22 alone. This indicates a positive shift in investor sentiment despite the recent market fluctuations.

Sorrabhol Virameteekul, Assistant Managing Director and Head of Investment Strategy at Kasikorn Securities, commented that the overall foreign investment in Thai stocks is continuing, largely driven by the 12% depreciation of the US dollar since the start of the year. This has resulted in increased capital flows into Asian equity and bond markets.

While the majority of foreign capital has flowed into bond markets, foreign investment in Thai equities has only just begun to show significant signs of inflow in July 2025. Although the inflow is positive, it remains modest compared to other countries, standing at around 1 billion baht. Nonetheless, Thai stocks are currently trading at relatively low levels compared to the regional average, which stands at approximately 1.5-2 times.

The foreign capital entering the Thai market has been concentrated in specific sectors, notably petrochemicals and banking. Additionally, high-dividend stocks have attracted renewed attention from international investors.

However, the ongoing trade negotiations between Thailand and the US remain a key factor to watch. Should these talks fail, the recent rebound and capital inflow could be short-lived. On the other hand, if the negotiations succeed and the tariff reduction moves from 36% to 20%, there is potential for continued capital inflows, which could drive the SET Index towards 1,275 points.

Weerawat Virojphoka, Senior Director of Securities Analysis at Finansia Syrus Securities, shared that there has been a continuous inflow of foreign funds into the Thai stock market in recent days. This trend is attributed to the weakening of the US dollar, which has strengthened Asian currencies, thereby attracting capital into the region.

In addition, investors are increasingly hopeful about the possibility of reaching a trade agreement between Thailand and the US, after seeing examples from Vietnam and Indonesia where similar agreements led to market growth. This has led to expectations that Thailand may follow a similar path, prompting speculative capital flows in advance.

"Foreign investors are waiting to see the results of the trade deal and how beneficial it will be before deciding whether to increase their investments or withdraw funds," said Weerawat.

Therdsak Thaveeteeratham, Executive Director of Research at Asia Plus Securities (ASPS), stated that the foreign fund flow is expected to continue into the second half of the year. This is mainly due to the fact that Thai stocks are currently "cheap", which could lead to slow and steady accumulation by investors. Additionally, it is anticipated that institutional and foreign selling in Q3 2025 will decrease, as the total value of long-term equity funds (LTF) has decreased to 117 billion baht, down 102 billion baht since the beginning of the year (YTD). The proportion of foreign ownership of Thai stocks has also been steadily declining, now standing at 24.2%.

He also noted that negative factors that pressured the Thai stock market in the first half of 2025, such as the Middle East conflict, have temporarily eased. Political factors that are unlikely to affect the 2026 budget bill, and the Thailand-Cambodia tensions, which have had limited impact on the Thai economy, should also not significantly affect the market in the second half of the year.

The remaining concern is the ongoing import tax negotiations with the US. If Thailand continues to face a 36% tax, there is a risk that this could affect the profits of listed companies by around 1%. However, if the tax rate is reduced, there is a higher likelihood that the Thai stock market will see an upward adjustment.

As for interest rate trends in Thailand for the second half of 2025, there is a possibility of 1-2 more rate cuts, ranging from 0.25-0.50%, reflected in Thai debt securities with maturities of less than 7 years, which are currently trading below the interest rate. In terms of fiscal policy, there are likely to be stimulus measures in the second half of the year, depending on the progress of the 2026 budget allocation, which is expected to follow the same timeline, provided there is no dissolution of parliament in the near future.