Thailand's Regulatory Shifts: Unlocking Liquidity in the Thai Bourse

Thailand's capital market has faced a perfect storm in 2025: a 20% year-to-date decline in the SET Index, sustained foreign investor outflows totaling $3.9 billion, and a fragile domestic economic outlook marked by high household debt and political uncertainty, according to a Bloomberg analysis. In response, the Stock Exchange of Thailand (SET) and the Securities and Exchange Commission (SEC) have launched a sweeping regulatory overhaul aimed at restoring liquidity and investor confidence. These reforms, centered on transparency, digital innovation, and structural modernization, represent a critical pivot for a market struggling to retain its relevance in Southeast Asia's competitive landscape.

Strategic Regulatory Overhaul: A Four-Point Plan

The SET's four-point strategy-encompassing regulatory reform, market development, legal modernization, and sustainability-has become the cornerstone of Thailand's efforts to stabilize its bourse. Key measures include:
1. Dynamic Price Bands and Uptick Rules: Introduced to curb excessive volatility, these mechanisms limit intraday price swings and restrict short selling to upticks, enhancing market stability, as reported by Nation Thailand.
2. Treasury Stock Buybacks: Over 37 listed companies repurchased shares worth 14 billion baht in 2025, signaling corporate confidence in undervalued equities, the Thai Times reported.
3. Dual-Class Share Structures: Legalized to allow high-growth SMEs to raise capital while retaining control, this reform targets the New Economy sector, with the Jump+ project aiming to nurture 50 such companies by 2026, the Bangkok Post reported.
4. Thailand Individual Savings Account (TISA): A long-term investment vehicle designed to inject retail capital into the market, TISA is positioned as a tool to deepen liquidity and broaden investor participation, Nation Thailand adds.

These reforms are complemented by the SEC's 2025–2027 strategic plan, which emphasizes digital transformation and ESG integration to align Thailand's market with global standards, as outlined by Thailand Business News.

Measuring Impact: Investor Confidence and Liquidity Metrics

The effectiveness of these reforms remains a work in progress. While the SET's average daily trading value rose 9.9% month-on-month to 43.3 billion baht in Q3 2025, according to the Thai Times, broader trends remain concerning. The FETCO Investor Confidence Index (ICI) fluctuated between "neutral" (110.36 in May) and "bearish" (93 in June), reflecting lingering skepticism about the government's ability to address structural issues like corporate governance and political instability, the Nation reported.

Foreign investors, who account for 55.3% of total trading value, continued net sales of 16.1 billion baht in May 2025, contributing to a year-to-date outflow of 70.7 billion baht, the Chiang Rai Times reported. This exodus underscores the challenge of reversing a decade-long trend of capital flight, even as the SET Index's 4% monthly decline in May 2025 highlights the fragility of market sentiment, Archyde reported.

However, early signs of progress exist. The Treasury Stock scheme has injected liquidity into key sectors, while the relaxation of foreign exchange regulations-raising allowable transfers from $50,000 to $200,000-aims to stabilize the baht and attract foreign capital, Seaproti reported. Additionally, the government's 157-billion-baht stimulus package, focused on tourism and digital innovation, may catalyze a rebound in consumer spending and corporate earnings, Reliance Consulting suggested.

Challenges and the Path Forward

Despite these efforts, Thailand's market faces headwinds. The SET remains the worst-performing major index globally in 2025, with a 16% annual decline, the Chiang Rai Times noted. Structural issues-such as weak corporate balance sheets, high household debt, and geopolitical risks-continue to deter long-term investment. The Vayupak Fund, a $4.5 billion stabilization initiative, has yet to produce measurable results, and analysts caution that quick fixes like cash handouts may lack the structural impact needed to restore confidence, the Asia Times wrote.

To succeed, Thailand must balance short-term interventions with long-term reforms. Strengthening ESG frameworks, accelerating digital infrastructure, and improving corporate transparency will be critical. As one expert notes, "The reforms are a necessary first step, but credibility will be earned only when governance improvements translate into sustained economic growth and investor trust," as a Thailand Business News analysis observes.

Conclusion

Thailand's regulatory shifts in 2025 represent a bold attempt to reinvigorate a struggling market. While early data shows mixed results, the focus on liquidity, transparency, and innovation aligns with global best practices. For foreign investors, the key question remains: Can these reforms create a virtuous cycle of confidence and growth, or will structural challenges continue to undermine progress? The answer will likely determine whether Thailand's bourse can reclaim its position as a regional investment hub.