Foreign Investors Flee Thailand as Iran War Bites
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- Foreign investors pulled a net $823 million from Thai equities and $705 million from bonds in March, the largest combined outflow since October 2024 and a sharp reversal of the $1.7 billion foreigners piled into Thai stocks in February.
- Thailand is among Asia's most energy-exposed economies, with the Middle East supplying nearly half of its oil and gas and gas powering over half of annual electricity output, according to Krungsri Research.
- JPMorgan remains cautious on Thai equities, with Asean equity strategist Khoi Vu telling the bank the market has yet to price in the energy shock's growth impact, as the full effect "has yet to fully materialise."
- Thailand's public debt sits at 66% of GDP, just shy of the government's self-imposed 70% ceiling, and Finance Minister Ekniti Nitithanprapas said Friday the country has "limited ammunition" to address its economic problems.
- The Thai baht has slid roughly 2.8% since the war broke out, while average inflation is now projected to rise as much as 3.5% this year depending on the conflict, a reversal from a 0.54% contraction in the first quarter.
- Bangkok has ruled out fuel subsidies but will absorb higher costs to keep electricity tariffs stable ahead of summer, and state planning agency estimates show every 1-baht rise in fuel prices cuts economic growth by 2 basis points.
Why it matters: With 66% debt-to-GDP nearing Thailand's 70% ceiling and nearly half its energy from the Middle East, Bangkok can neither subsidize fuel nor cut rates aggressively if oil stays elevated. JPMorgan's Khoi Vu says Thai equities haven't yet priced in the energy shock's drag on consumption, exports, and tourism — the pillars of Southeast Asia's second-largest economy.
