World’s biggest stock rout deepens as Thai market rescue falters
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Thailand’s benchmark stock index has tumbled more than 16 per cent in 2025, making it the world’s worst performer.
PHOTO: REUTERS
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Singapore – An ambitious campaign to revive Thailand’s battered stock market is falling flat, as entrenched pessimism about the economy accelerates a foreign funds exodus.
Seven months after US$4.5 billion (S$6 billion) was newly injected into the Vayupak Fund, analysts have been left perplexed by how little it has helped the benchmark SET Index.
The stock gauge has tumbled more than 16 per cent in 2025, making it the world’s worst performer among 92 indexes tracked by Bloomberg. Over the past 12 months, foreigners pulled out US$4.2 billion, the most across South-east Asia.
At the heart of weak investor sentiment is a lack of confidence that policymakers will be able to spur the economy beyond tourism, as well as deep-rooted concerns about high household debt, political uncertainties and corporate scandals.
US President Donald Trump’s tariff war is adding to the headwinds as a stronger US dollar has forced investors to flee from emerging markets.
“Most people realise our equities are trading at very cheap valuations, but it’s very hard to convince them to invest in stocks now with poor sentiment and a weak economic outlook,” said SCB Asset Management chief executive Narongsak Plodmechai.
The government has “demonstrated its serious intention to rescue the stock market, but there should be more urgent steps to support the market”, he added.
The faltering rescue plan – which aims to revive the stock market by investing into local firms – is offering policymakers and investors a warning about the ability of state-run investment funds to spur markets. What Thailand’s government does next will determine its status among market peers.
When the authorities announced fund raising for Vayupak in August 2024, analysts lauded the news, with Goldman Sachs Group upgrading Thai stocks on expectations it would help attract foreign capital.
Political instability and poor corporate earnings had roiled Thailand’s markets for much of 2024, and officials pinned their hopes on a stock market renaissance on the fund.
The market rallied for a while before the challenges set in. Government data showed that Thailand’s household debt pile remained stubbornly high. Economic growth was also coming in below most forecasts, with 2024 marking the slowest growth rate among its South-east Asia peers. Consumption and manufacturing sectors were also showing signs of slowing.
In November, Goldman downgraded Thai stocks, citing poor economic growth and high valuations. “With the supportive equity market boost from the Vayupak Fund fading, Thailand’s less favourable fundamentals are back in view,” it said in a note.
At least 50 per cent to 60 per cent of Vayupak’s US$4.5 billion funds has been deployed, according to Macquarie analyst estimates. The benchmark SET Index is down nearly 10 per cent since the new fund raising.
Investors say that hopes for a turnaround lie with Prime Minister Paetongtarn Shinawatra’s young government to take more forceful measures to revive the economy. That would include creating a more business-friendly environment and stronger regulatory reforms.
Earlier in March, Thailand announced a US$4.4 billion cash handout plan to stimulate growth, and has called for a weaker currency to support tourism and exports. It also ramped up infrastructure investments and proposed legalising casinos. Last week, it announced tax incentives for investments into the market.
Still, “sentiment is so weak that those measures couldn’t resist the global situation”, said Ms Chavinda Hanratanakool, chief executive of Krung Thai Asset Management, which co-manages the Vayupak Fund. “We just hope that the government’s serious attempts to boost economic growth will succeed. That will be the most important driver for Thai equities.”
Thailand is not the only emerging market in Asia to get hit. Stocks and currencies in Indonesia and India have also been heavily sold off due to the dollar strength. Still, Thailand’s 2025 stock market tumble is at least double its peers as analysts point to more investors losing faith in the economic outlook.
“We continue to see foreign outflows as there are no clear catalysts that Thailand will overcome its structural challenges,” according to Mr Kaushal Ladha, head of Thailand research for Macquarie Capital, adding that “there has been a general lack of conviction in buying” by domestic funds too. BLOOMBERG
