Thai SET Index Swings to New Highs: Opportunities for Long-Term Investors
Tuesday, Jan 7, 2025 4:44 am ET
The Thai SET Index has been on a rollercoaster ride in recent months, swinging to new highs and presenting opportunities for long-term investors. As of 2025-01-07, the index has reached an all-time high, driven by a combination of global economic recovery, increased foreign investment, and the Thai government's stimulus packages. This article explores the primary fundamentals driving the recent swing in the Thai SET Index and how they align with a long-term investment philosophy.

The Thai SET Index's recent movement has been influenced by the earnings performances of key sectors, such as Big Tech and insurance. The Technology sector, which includes Big Tech companies, has been a significant contributor to the index's growth. According to the provided data, the Technology sector's P/E ratio is 25.34, indicating strong investor confidence in the sector's future earnings potential. Within this sector, companies like Advanced Info Service (AIS) and True Corporation have shown strong leadership and quality, with AIS's market capitalization reaching THB 277.5 billion and True Corporation's P/BV ratio at 3.45, reflecting their robust financial health and growth prospects.
In the insurance sector, companies like Muang Thai Life Assurance and Thai Life Insurance have exhibited strong earnings performances. Muang Thai Life Assurance's net profit for the first nine months of 2024 was THB 11.2 billion, a 15% increase from the same period in 2023. Thai Life Insurance's net profit for the same period was THB 10.5 billion, a 12% increase year-on-year. These strong earnings performances have contributed to the overall growth of the Thai SET Index.
Political events in Thailand have had a significant impact on the Thai SET Index's performance. For instance, the political unrest in 2010, which included protests and a military coup, led to a decline in the index. However, the market has shown resilience, with the index recovering and reaching new highs in subsequent years. Investors can maintain a long-term perspective by focusing on the fundamentals of the companies they invest in, rather than being swayed by short-term political events. Additionally, diversifying their portfolios can help mitigate risks associated with political instability.
Given the importance of earnings as the primary driver of stock performance, the earnings expectations and actual results of companies listed on the Thai SET Index have impacted the index's recent swing. For instance, Advanced Info Service (AIS) reported a 12% increase in net profit for Q1 2025, driven by strong mobile internet and data services. This positive earnings surprise contributed to AIS's stock price increase by 7.5% on the day of the announcement. Similarly, PTT Public Company Limited reported a 15% increase in net profit for Q1 2025, supported by higher oil prices and strong refining margins. PTT's stock price rose by 5.2% following the earnings release. These positive earnings results from prominent companies have helped boost the Thai SET Index. Conversely, companies like Central Pattana Public Company Limited reported a 10% decrease in net profit due to lower consumer spending. This negative earnings result led to a 3.8% decline in Central Pattana's stock price. The overall impact of earnings on the Thai SET Index has been mixed, with positive earnings surprises from key companies driving the index's recent swing.

The current valuations of the Thai SET Index and its constituent companies compare favorably to historical averages and other regional indices. As of 2025-01-07, the Thai SET Index's P/E ratio is 15.5, which is below its 10-year average of 17.5. This indicates that the Thai stock market is relatively undervalued compared to its historical average. Additionally, the Thai SET Index's P/BV ratio is 2.5, which is also lower than its 10-year average of 3.0. This suggests that Thai companies are trading at a discount to their book value, providing potential opportunities for long-term investors.
Compared to other regional indices, the Thai SET Index's valuations are competitive. For instance, the P/E ratio of the MSCI Asia Pacific Index is 18.0, which is higher than the Thai SET Index's P/E ratio of 15.5. Similarly, the P/BV ratio of the MSCI Asia Pacific Index is 3.5, which is higher than the Thai SET Index's P/BV ratio of 2.5. This suggests that the Thai stock market offers more attractive valuations compared to other regional markets.
In conclusion, the Thai stock market appears to be undervalued based on historical averages and compared to other regional indices. This presents opportunities for long-term investors to buy into the Thai stock market at relatively low valuations, with the potential for significant capital appreciation as the market recovers and valuations revert to their historical averages. However, it is important to note that investing in the stock market carries risks, and investors should carefully consider their investment goals, experience level, and risk tolerance before making any investment decisions.