SET bullish on Q4 because of Vayupak Fund

Thai stocks could continue to rise in the fourth quarter given gradual investment in the state-run Vayupak Fund and various tax-saving Thai ESG funds that are expected to draw investments towards the year-end, says the Stock Exchange of Thailand (SET).
SET president Asadej Kongsiri said on Thursday retail investors have increased their trading, accounting for 52% of investment now, up from less than 50% the past several months.
Younger investors are more interested in investing in the Thai bourse, as more than 2,000 investment accounts were opened during SET roadshows in Chiang Mai and Khon Kaen in the third quarter.
“The SET continues to focus on expanding the retail investor base along with improving financial literacy and making trading convenient for institutional and foreign investors,” said Mr Asadej.
Soraphol Tulayasathien, senior executive vice-president of the SET, said the Thai index rose to the highest level in 22 months in September, backed by the Federal Reserve’s interest rate cut, improving domestic politics, and tighter trading control measures to restore market confidence in the Thai bourse.
Other supporting factors include the recovery of exports, government stimulus measures, launching new Vayupak Fund units and adjusting the investment conditions for Thai ESG funds, he said.
In September, the Fed slashed its policy rate by 50 basis points to 4.75-5%, the first reduction in more than four years, seeking a balance between risks to employment and inflation targets.
Historically, Fed rate cuts increase emerging market equities. Recent foreign capital inflows into Southeast Asian bourses spurred rallies in most regional stocks in September, led by Thailand, the Philippines and Singapore, in descending order.
However, sensitivity analysis suggests the strength of the baht may hurt future earnings forecasts for export and tourism stocks, said Mr Soraphol.
At the end of September, the bourse finished at 1,448.83 points, up 6.6% from the previous month, marking the highest gain since August 2021. The benchmark index rose 2.3% from the end of 2023.
Average daily trading value on the SET and Market for Alternative Investment rose 26.4% year-on-year in September and 35.8% from the preceding month to 62.5 billion baht (US$1.94 billion). For the first nine months of 2024, daily trading value averaged 46.5 billion baht.
For the nine months to September, industry groups that outpaced the SET index comprised technology, consumer products, and agri-business and food industries.
The SET’s forward price-to-earnings (P/E) ratio was 15.8 times at the end of September, above the average of Asian bourses of 13 times. The historical P/E ratio is 17.5 times, exceeding the average of Asian bourses of 15.6 times.
The SET’s dividend yield ratio is 3.28%, higher than the average of Asian stock markets at 3.04%.
Daily trading volume on the Thailand Futures Exchange averaged 707,472 contracts last month, up 41.9% from the previous month because of higher trading volume of SET50 Index Futures and Single Stock Futures, he said. For the first nine months, daily trading volume dropped 13.5% year-on-year to 474,728 contracts, attributed to the decline in trading volume of Single Stock Futures and SET50 Index Futures.