Since the beginning of the year, the Thai stock market has sharply declined more than 300 points, or more than 20%, ranking among the worst-performing markets globally. This downturn raises grave concerns that policymakers must directly address.
Experts say the tumbling stock market is the outcome of both external and internal factors. Global trade wars, geopolitical shifts and economic realignments -- following the America First policy of US President Donald Trump -- have strongly affected market sentiment.
While these external conditions are beyond Thailand's control, internal economic weaknesses may pose an even greater challenge. Domestically, Thailand's prolonged economic slowdown has hit investor confidence. The country's GDP growth lags behind its Asean counterparts, highlighting structural issues.
Noticeably, the inability of regulators to ensure transparency has exacerbated investor uncertainty. Several listed companies have faced corporate governance scandals, such as capital mismanagement and embezzlement, yet regulatory responses have been slow and inadequate. This has raised questions about the effectiveness of Thailand's financial oversight, corporate accountability and regulatory standards.
The government has attempted to stimulate the economy with initiatives such as the 10,000-baht digital wallet handout for 45 million citizens. However, delays in its implementation and unclear economic benefits have cast doubt on the policy's effectiveness. Other measures, including the establishment of the Vayupak Fund to prop up stock prices, have failed to produce sustainable market stability. While the stock index briefly reacted to these measures, it quickly retreated, underscoring persistent structural concerns.
Monetary policy interventions have also yielded limited results. The Bank of Thailand's interest rate reductions, long demanded by the government as a means to stimulate economic activity, have had little impact on the stock market. Although lower rates may provide some relief by reducing financial costs, they have not been enough to restore investor confidence.
But Thailand's economic challenges extend far beyond the stock market. The country's manufacturing sector still relies on its glorious past, like in the automotive and extractive industries. Meanwhile, the government's policy to develop innovation-driven industries or S-curve sectors has yet to materialise. The country's key economic engines, including exports, are also faltering due to escalating global trade conflicts. The stagnant profits of listed companies, rising household debts and an ageing population further strain Thailand's long-term economic prospects. Additionally, declining human resource quality and weaknesses in the education system pose significant risks to the nation's competitiveness.
These challenges represent deep-rooted structural issues that lack clear, long-term solutions. The government has largely focused on short-term measures without a long-term economic vision. This may be due to Thailand's fragile political landscape, where successive administrations just prioritise four-year electoral cycles rather than long-term strategic goals.
The primary cause of Thailand's stock market downturn is not algorithmic trading or short-selling practices -- it is the country's underlying economic structure.
To regain investor confidence and ensure long-term stability, the government must adopt more forward-thinking policies, foster innovation-driven industries and implement meaningful structural reforms.
