Bangkok: Thai stocks in May 2025 experienced a significant decline of 4%, attributed to uncertainties surrounding US-China negotiations and a reduction in MSCI’s weighting of Thai stocks. The Stock Exchange of Thailand (SET) faced a challenging month due to these international and domestic factors, with experts and market participants closely monitoring upcoming developments.
According to Thai News Agency, the Deputy Managing Director of the Stock Exchange of Thailand, Mr. Soraphol Tulayasathian, highlighted that the decline in the SET Index was influenced by two primary international factors. Firstly, the mid-May US-China talks in Switzerland initially showed promise but were later overshadowed by renewed uncertainties. Secondly, MSCI’s bi-annual adjustment saw the reduction of Thai stocks’ weight to 1.4% and the removal of key companies like Bangkok Expressway and Metro Public Company Limited (BEM), Central Retail Corporation Public Company Limited (CRC), and Krungthai Card Public Company Limited (KTC) from the MSCI Global Standard Index.
Domestically, the National Economic and Social Development Board (NESDB) reported a GDP growth of 3.1% in the first quarter of 2025, driven by accelerated exports and a robust recovery in government investment. Despite these gains, the SET Index was affected by the overall volatility in the market, with listed companies reporting mixed results. The reduction in global crude oil prices and lower interest expenses, following a Bank of Thailand policy rate cut, provided some relief to businesses.
The market’s focus remains on upcoming negotiations between Thailand and the United States, with a critical deadline on July 7, 2025. A positive outcome could potentially uplift the Thai stock market. However, NESDB’s GDP growth forecast of 1.8% for 2025 suggests a slowdown in the latter half of the year, prompting concerns about fiscal policy, economic stimulus measures, and the monetary policy direction under a new BOT governor.
Employment figures for the first quarter of 2025 showed a 0.5% decline, potentially impacting job opportunities for new graduates. Despite these challenges, Mr. Soraphol remains optimistic, noting that a substantial portion of listed companies derive income from international markets, potentially mitigating domestic economic pressures. Additionally, the government’s planned economic stimulus and investment initiatives could bolster investor confidence.
Mr. Asadej Kongsiri, Director and Manager of the Stock Exchange of Thailand, pointed out the potential repercussions of a 36% US tax on Thailand, which could reduce GDP growth to 1%. He acknowledged the impact on the stock market but emphasized the stability of Thai economic fundamentals and the continued attractiveness of Thai stocks for foreign investors.
Moreover, the adjustment of the Free Float criteria by the Stock Exchange of Thailand aims to align more closely with Market Capitalization, enhancing the appeal of Thai stocks to large companies and reflecting the true business value. This strategic move is part of a long-term effort to strengthen the financial ecosystem.
As of May 30, 2025, the SET Index closed at 1,149.18 points, marking a 4.0% decline from the previous month and a 17.9% decrease year-to-date. Despite these setbacks, Thai stocks maintain a competitive edge in the ASEAN region, offering high dividend yields and opportunities for portfolio diversification. The market’s ability to attract foreign investment remains contingent on clear government investment strategies, particularly in long-term infrastructure projects.
The Futures Exchange Market (TFEX) also experienced a downturn, with a 17.7% decrease in average daily trading volume in May, driven by declines in Single Stock Futures and SET50 Index Futures.