Investors must take a long-term approach as the Stock Exchange of Thailand (SET) has entered a correction phase, the bourse said on Wednesday, but insisted dividend yield remain attractive despite a downturn.
Soraphol Tulayasathien, senior executive vice-president of the SET, said the Thai index has entered a correction phase, declining 17.9% as of February's close from this cycle's peak.
Despite the downturn, dividend yields remained attractive compared with historical levels. Fundamental multipliers appeared notably discounted, with price-to-earnings (P/E) ratios of 12.5-16.6 times and price-to-book value (P/BV) ratios of 1.2-1.4 times, significantly below historical correction-period averages, he said.
During this adjustment period, high P/E stocks experienced the steepest declines, signifying market concerns over risk exposure and overvaluation.
Thai stocks have the lowest valuations in the region, mainly attributed to weaker listed firm earnings than expected, said Mr Soraphol. However, the P/E ratio of Thai stocks remains in line with regional markets, he said.
"While there are many fundamentally strong stocks available at attractive valuations, investors must take a long-term approach. Investors with enough savings should accumulate value stocks for long-term investment," said Mr Soraphol.
The introduction of the Thai ESG Extra fund is expected to bring in 30 billion baht in new capital to the bourse over the next two months, he said.
The short-term focus is the trade war as US President Donald Trump flip-flops on tariff threats, promising 20% duties on Chinese goods and 25% on Canadian and Mexican imports, effective March 4. The US also announced reciprocal tariffs against all countries taxing American exports, starting April 2.
Mr Soraphol said Thai capital market organisations are responding with measures to drive the market recovery through economic growth initiatives, protectionist policy risk mitigation, and market-strengthening programmes focused on attracting new investment, adding value creation among listed companies, and corporate governance enhancement.
At the end of February, the SET index declined 8.4% from a month earlier to close at 1,203.72 points, moving in line with regional peers and posting a year-to-date dip of 14%.
Foreign investors sold 6 billion baht in February, less than in January.
Average daily trading value on the SET and Market for Alternative Investment increased 10.1% year-on-year to 52 billion baht (roughly US$1.53 billion). Local institutional investors contributed more than 10% of total trading value for five consecutive months.
Compared with the end of 2024, sectors that outperformed the overall index over the period were finance, agriculture and food, consumer products, services, and resources.
The SET's forward P/E ratio was 12.6 times at the end of last month, beating the Asian stock market average of 12.3 times. The historical P/E ratio was 15.3 times, exceeding the Asian stock market average of 14.2 times. The SET's dividend yield ratio was 4.03%, again besting the Asian stock market average of 3.27%.
Average daily trading volume on the Thailand Futures Exchange was 485,359 contracts, up 24% month-on-month. Year-to-date, average daily trading volume was 434,992 contracts, down 10%.
