Pichai explains market dip, Urges focus on fundamentals

Pichai Chunhavajira, Minister of Finance, commented on the Thai stock market situation on April 8, 2025, when the index closed down by more than 50 points.

Pichai, who also serves as Deputy Prime Minister, said that if we analyze the current financial landscape, we can see that the stock index decline stems from investors selling off risk assets in favour of US government bonds. This shift typically occurs when the economic outlook is uncertain, prompting investors to seek safer investments.

The increased demand for US government bonds, especially from institutional investors, has led to a drop in bond yields. As a result, the interest rates the US government has to pay also decrease, which in turn helps reduce the national debt and lowers the financial cost of borrowing for the United States.

Regarding the extension of the short-selling ban in the stock market, Pichai stated that there will likely be no extension, as the decision to implement the measure—effective from April 8—already required significant courage on his part.

He explained that, under normal circumstances, short-selling is a tool used in an efficient market. However, seeing how stock indices in other countries have dropped significantly, a temporary measure was introduced to prevent the Thai index from being shorted by investors betting on a downturn. This measure, however, will be in effect for only four days. As for stock pricing levels, adjustments have also been made to the ceiling and floor limits to help prevent panic among investors, encouraging them to reassess whether the stocks they hold remain fundamentally sound.

“The current measures aim to prompt investors to think and remind them not to panic. Just focus on the fundamentals,” Pichai said.

As for additional supporting measures such as a policy interest rate cut, Pichai stated that Thailand’s interest rate decisions depend on two key factors: inflation and the risks associated with investment and the stability of financial institutions. However, what’s most important is the direction of the US interest rate policy. He noted that it seems the US is leaning toward lower interest rates, and therefore, Thailand’s rate should align with global trends. If the US significantly lowers its rate, Thailand may follow suit.

Regarding concerns that some industries might delay investment in Thailand, Pichai acknowledged that potential investors may want to pause and reconsider. Given the current uncertainties, they need time to evaluate whether to invest in Thailand, their home countries, or the US—a decision that requires careful consideration.