Benefiting from post-election political stability, the dividends of economic structural transformation, and the safe-haven effect of risk-averse capital, the long-dormant Thai stock market has performed remarkably well this year, showing relative strength in the Asia-Pacific region. However, with the rapid deterioration of geopolitical tensions in the Middle East, the Thai stock market once plunged over 8% in a single day, triggering the first-level automatic circuit breaker and resulting in a tug-of-war between bulls and bears.
From “Asian Tiger” to Regional Laggard
Thailand was once the second-largest economy in Southeast Asia, with double-digit economic growth in the late 1980s, earning it the title of one of the “Four Asian Tigers.” But the good times did not last. Especially after the COVID-19 pandemic, slow export recovery, prolonged political instability, delayed reforms, and hindered infrastructure and tourism development have led to simultaneous declines in domestic consumption, manufacturing, and tourism sectors. This severely damaged market confidence in Thailand’s overall economy, resulting in weak economic growth. Thailand has now been surpassed by Singapore, falling to the third-largest economy in the Association of Southeast Asian Nations (ASEAN). The Thai government has downgraded its full-year economic growth forecast from 2.4% to 2.2%, while the International Monetary Fund predicts Thailand’s economic growth rate this year will be only 1.6%, marking its worst performance in nearly three years and placing it at the bottom among ASEAN countries.
In addition, Thailand’s economy is currently weighed down by several structural issues, including an accelerating aging population and continuous shrinkage, as well as a significantly high level of household debt. At present, Thai household debt has reached nearly 90% of GDP, making it one of the highest in Asia, whereas Vietnam’s is only 25%. According to statistics, the actual amount of household debt has reached as high as 16 trillion baht and has not shown a significant decline. Even more concerning is the deterioration in the quality of non-performing loans (NPLs). Loan growth has been negative for six consecutive quarters, and small and medium-sized enterprises (SMEs) have experienced negative growth for 14 consecutive quarters. Beyond debt, Thailand is also facing multiple crises including gray money, fraud, and declining competitiveness.
The Tourism Reversal
At the same time, Thailand’s long-reliant tourism sector began experiencing severe upheaval and reshuffling starting last year. The industry has been hit hard by numerous adverse factors such as security concerns in scam zones, conflicts along the Thai-Cambodian border, a sharp appreciation of the baht, and floods in the southern region. Tourism in Thailand saw its first decline in a decade, with nearly 33 million foreign visitors last year—a drop of over 7% compared to the previous year and nearly 20% less than the pre-pandemic peak. Tourism revenue was about 1.5 trillion baht. Meanwhile, Vietnam has risen strongly to officially surpass Thailand as the favorite Southeast Asian destination for Chinese tourists. Last year, the number of Chinese visitors to Vietnam is estimated to have reached 5.2 million, a significant 41% increase from the previous year. In contrast, due to safety concerns and changing tourism preferences, Chinese visitors to Thailand dropped by more than 30% compared to the previous year, falling below 5 million. This shift is expected to cause Thailand’s tourism sector to lose over $3.5 billion.
The Anutin’s New Administration
After Thailand’s new Prime Minister Anutin Chanwirakun took office last September, he immediately faced significant political and economic challenges. He emphasized the need to revive tourism and implement rapid consumer stimulus along with long-term economic measures. He also stated that Thailand’s economy has fallen behind Vietnam’s, calling it a “nightmare.” Additionally, the influx of large quantities of cheap goods from mainland China into the global market, combined with fierce competition from emerging manufacturing hubs like Vietnam, is weakening Thailand’s industrial base. The U.S. imposing a 19% reciprocal tariff on Thai exports to America has also hurt Thailand’s export-driven economy.
To overcome the economic crisis, the new government plans to drive the economy with a four-year “Big Wins” strategy, focusing on three major investment policy areas to ensure sustainable economic growth for Thailand. These include infrastructure and green economy investments, promoting direct power purchase agreements and raising funds through infrastructure joint funds to alleviate the burden of accumulating public debt. The second area is investment in human resources, aiming to reform education using digital technology and artificial intelligence. The third is legislative investment, which involves revisiting visa conditions for high-tech workers, amending land law obstacles, and fully implementing the Thailand Board of Investment (BOI) fast-track clearance system.
Political Resilience and Reform
In February of this year, Thailand held an early House of Representatives election alongside a constitutional referendum. The election results revealed intriguing political contradictions. Ultimately, the ruling coalition led by the conservative Bhumjaithai Party secured an overwhelming majority. However, the Bhumjaithai Party’s victory was built upon structural factors such as local political family networks, nationalist mobilization, and the design of the electoral system. In particular, the single-member district two-vote system caused “split voting,” where many voters supported the reformist Move Forward Party in the party-list vote but still cast their district vote for conservative candidates backed by local factional resources. Meanwhile, the majority of voters also supported the referendum to initiate the drafting of a new constitution, reflecting the tug-of-war within Thai society between “resilient authoritarianism” and democratic aspirations. Despite this, once the election results became clear, market concerns over a “hung parliament” and political instability were alleviated. The market was optimistic that the new cabinet could be formed quickly, eliminating the risk of budget allocation delays and thereby supporting public investment. Following the election, the Thai stock market surged by as much as 14% in a single wave, becoming the “anchor” that led the Thai market’s strength.
The Safe-Haven Appeal
Thailand is a major investment hub for many Taiwanese businesses and a key target in Taiwan’s “New Southbound Policy.” The Thai economy is transitioning from traditional manufacturing to the “new economy.” With the global supply chain restructuring, Thailand has become a critical location for semiconductors, printed circuit boards (PCBs), and electric vehicles (EVs). Taiwanese companies and international major manufacturers are accelerating their entry into the Eastern Economic Corridor, driving strong stock performance for electronic component companies such as Delta Electronics Thailand.
Due to global market concerns over the AI bubble and uncertainties surrounding U.S. interest rate cuts, the Thai stock market—with its high dividend yields—has become a safe-haven destination for overseas investment funds looking to diversify risk. Many Thai banks and energy companies offer average dividend yields as high as 5% to 7%, attracting long-term investors seeking stable returns. Additionally, Thailand’s current inflation rate is extremely low, expected to be around only 0.3% for the year, far below the global average. This gives the Bank of Thailand room to maintain an accommodative monetary policy or even cut interest rates, helping to reduce corporate financing costs and attract investment capital.
Risk Outlook
However, Thailand is highly dependent on oil energy. After the outbreak of military conflict between the U.S. and Iran, Thailand’s already fragile economic recovery has faced new headwinds. The geopolitical situation in the Middle East has rapidly deteriorated, causing the Thai stock market to plunge more than 8% in a single day, triggering a historically rare automatic circuit breaker. The winning momentum of Thai Prime Minister Anutin was also wiped out. According to assessments by the National Economic and Social Development Council of Thailand, if international oil prices rise to $95 to $105 per barrel, Thailand’s GDP growth this year will drop to 1.6%. If the conflict drags on and oil prices surge to $125, the GDP growth rate could further fall to 1.3%, and the baht may depreciate to as low as 33 baht per U.S. dollar.
Equity Thailand Funds Performance Analysis
According to LSEG Lipper statistics, there are currently four registered Thailand equity funds available for sale domestically in Taiwan. Year-to-date(as of 2026/3/16), their average return has reached as high as 13.5%. The average return over the past three months is 13.3%, over the past six months is 16.9%, and over the past year it is even higher at 24.6%. However, Thailand’s economy is still in a downturn, and the political and economic situation remains unstable, so investors should avoid allocating too high a proportion to these funds.
Figure 1: Performance of Equity Thailand RFS Taiwan
Source：LSEG Lipper, as of 2026/3/12, in TWD
