A resurgent tourism sector, along with its expected positive impact on domestic consumption, has raised the outlook for Thailand’s stock market this year, making it a top pick in the Asean region.

Contributing to this upbeat sentiment is the performance of the country’s initial public offering (IPO) market, which raised a robust 127.84 billion baht (US$3.91 billion) in 2022, the highest in the region.

There were 28 IPOs listed on the Stock Exchange of Thailand (SET) last year, with the biggest, Thai Life, raising more than US$1 billion.

By comparison, Indonesia raised US$2.3 billion from 54 IPOs last year, Singapore garnered US$421 million from nine listings in the first 10.5 months of 2022, while Vietnam had only six IPOs totalling US$65.05 million, according to Deloitte.

Many of the new stocks in Thailand are performing well, with manufacturers Polynet and Royal Plus having grown 80% and 70% respectively since their IPOs last year.

“We continue to see several IPOs from a diverse pool of industries on the [SET], including fast-moving consumer products, financial services, and construction businesses,” says Wilasinee Krishnamra, disruptive events advisory leader, Deloitte Thailand. “In particular, this year, we saw the first [real estate investment trust] which invested in airport leasehold properties. There are 39 companies in the pipeline expecting to list by 2023.”

Highest liquidity

The country’s stock exchange has the highest liquidity in the Asean, a position it has been holding since 2012. Its average daily trading value is 76.77 billion baht (US$2.35 billion), data from SET show.

Thai stocks are the favourite of J.P. Morgan in the region. The bank cites the stronger-than-expected revival of the country’s tourism industry on the back of China’s reopening, and the benefits it is expected to bring to domestic consumption.

Kae Pornpunnarath, J.P. Morgan’s head of equity research in Thailand, also points to the robust trading of Thai stocks ahead of the general election later this year and the strong operating performance of many listed companies.

A solid Thai baht, growing in tandem with the tourism recovery, should enhance returns for equity investors, J.P. Morgan says. It estimates that Chinese tourists would help double Thailand’s tourism revenue to US$39 billion this year, or about 6% of the country’s GDP.

A similar view is held by HSBC, which is optimistic about the positive impact of Chinese tourists on Asian equities.

“We are selective on Asean and Thailand remains our favourite market,” according to the bank’s 2023 Asian economic outlook. For sectors, HSBC is overweight consumer staples, consumer discretionary, and utilities.

Seeking to capitalize on the favourable market conditions and opportunities, SET has unveiled a three-year (2023-2025) strategic plan, which includes enticing new economy companies for listing, accommodating fund-raising via digital tokens, launching small-ticket investment products, and exploring the introduction of environment-linked products.