Thai stock market risks falling to 1,050 points as brokers urge caution amid economic and political uncertainty

Thailand’s stock market faces further downside pressure with the key SET Index at risk of dropping to 1,050 points, analysts warned, citing a lack of positive momentum and mounting concerns over economic conditions, political instability, and Middle East tensions.

On Monday (June 16), the SET Index closed at 1,114.49 points, down 8.21 points or 0.73%, with a trading value of 41.1 billion baht. The index touched an intraday low of 1,107.79 points, a drop of nearly 15 points, reflecting a market weighed down by old concerns without any new drivers.

Analysts are urging investors to adopt a “wait and see” approach and increase cash holdings while waiting for clearer signals in the second half of the year. The 1,050-point level is seen as a critical support for 2025.

Apichart Phubancherdkul, senior director of strategic analysis at TISCO Securities, told Krungthep Turakij that the market has room to decline further due to the absence of new supportive factors. Existing risks persist, including weak economic prospects, political uncertainty, and ongoing instability in the Middle East.

Specific sectoral concerns are also weighing on investor sentiment. Shares in tourism and hospital groups—especially those relying on Arab clients—are under pressure. Airports of Thailand (AOT) is also affected by King Power’s move to cancel its duty-free concession, adding to overall market negativity.

Technically, the market fell below the 1,120-point threshold for the first time, raising the possibility of slipping below 1,100. While a brief rebound could occur, Apichart warned it would not mark a bullish turn, given the prevailing murky outlook. Should the index fall below 1,100, short-term opportunities may arise, but the overall trend remains cautious.

“Our strategy has been clear. If the SET drops below 1,180 points, investors should wait and see, holding more cash,” he said. The market has now declined for five consecutive weeks, and this week could mark the sixth. An adjustment to the FTSE index this week is expected to see Thai stocks downgraded, with an estimated US$150 million in capital outflows.

Natthaphon Khamthakrua, assistant managing director at Yuanta Securities Thailand, echoed similar concerns. He said the market remains weighed down by political instability, particularly uncertainties around the Cabinet reshuffle. If the reshuffle fails to bring stability, speculation over a possible House dissolution could intensify.

Tensions along the Thai-Cambodian border and a lack of progress on US-Thai trade talks are also adding to the jitters. A potential escalation in the Middle East could further stoke global inflation, putting more pressure on markets.

He sees 1,090 as a key support level but considers a drop below 1,000 unlikely at this stage.

Kitpon Praipaisarnkit, deputy managing director at UOB Kay Hian Securities (Thailand), said market sentiment remains fragile, with the ongoing unrest in the Middle East continuing to dampen investor appetite for risk assets. The resulting rise in oil prices could fuel inflation. Meanwhile, Thailand’s economic indicators are showing signs of a slowdown, which may weigh on corporate earnings in the second and third quarters of 2025, compared to the first quarter.

He also highlighted concerns surrounding AOT. Although AOT is backed by bank guarantees that help mitigate short-term earnings risks, those risks have effectively been shifted to the commercial banking sector. Banks may be liable to cover payments to AOT, which means the impact is not limited to AOT shares alone but extends to the banking sector as well.

Looking ahead, he expects the SET Index to potentially dip close to its previous low of around 1,056 points. However, he considers a fall below 1,000 unlikely at this stage, as valuations in several sectors have already adjusted downward significantly. Many stocks that once traded at price-to-earnings (P/E) ratios of 25–30 are now around 15.

Despite the short-term challenges, Kitpon urged investors to take a medium-term view and look for recovery opportunities in the second half of the year. He sees potential in the tourism sector, where many stocks have dropped back to levels seen during the Covid-19 period, even though the current situation is markedly better. While earnings may slow, significant losses like those seen during the pandemic—when companies posted two years of losses—are not expected.

He also noted that not all retail stocks are equally exposed to risk. For instance, CPALL, CPAXT, and COM7 have maintained their profit forecasts since the beginning of the year, and in some cases, have even seen small upgrades.