Crisis of Confidence: How Corporate Scandals Drove Thailand's SET Index to Seven-Year Lows

 

 

As corporate fraud scandals and global headwinds converged, Thailand's capital market faced its darkest year in recent memory.

 

As 2025 draws to a close, Thailand's Stock Exchange finds itself at a crossroads.

 

What began as a year of cautious optimism has devolved into what market observers describe as a "crisis of confidence"—a perfect storm of high-profile corporate collapses, persistent foreign capital outflows, and mounting economic headwinds that has left the SET Index languishing near seven-year lows.

 

Whilst US markets continued to reach new highs buoyed by artificial intelligence investments, emerging markets faced mounting pressures from escalating trade tensions.

 

The return of protectionist policies under the second Trump administration brought reciprocal tariffs that have fundamentally reshaped global trade flows, with Thailand facing a punitive 19% tariff on exports to its fourth-largest trading partner.

 

Yet amidst the volatility, some analysts maintain measured optimism.

 

Chaiyaporn Nompitakcharoen, managing director of securities trading at Bualuang Securities, noted that despite corrections of 5-10% in technology stocks, the adjustments represent merely a "healthy correction" before the next recovery cycle, with fundamental factors remaining robust including central bank rate cuts and solid corporate earnings growth.

 

Against this turbulent global landscape, Thailand's capital market has suffered disproportionately.

 

The SET Index closed at approximately 1,270 points in late December 2025, down roughly 7.5% year-on-year and marking a seven-year low.

 

More troubling still, trading values have plummeted to 20-year lows, whilst the SET50 Index has fallen approximately 23% for the year.

 

 

Foreign investors remained net sellers to the tune of 108 billion baht for the first ten months of the year, according to SET data.

 

 

Corporate Scandals: The Defining Narrative

The year's narrative has been dominated by an unprecedented convergence of corporate disgrace. On 26 December 2025, JKN Global Group traded for the final time before delisting.

 

As shareholders scrambled to offload near-worthless stock, a Bangkok court delivered a two-year prison sentence to founder Jakkaphong "Anne" Jakrajutatip for fraud—to an empty courtroom, as Jakkaphong had reportedly fled to Mexico. JKN's implosion left bondholders facing losses exceeding 3.2 billion baht.

 

The healthcare sector was rocked by the spectacular downfall of Dr Boon Vanasin, the 86-year-old founder of Thonburi Healthcare Group (THG).

 

Criminal complaints from 527 victims claimed losses exceeding 7.6 billion baht.

 

Dr Boon allegedly used his credentials to lure investments into five phantom healthcare projects that existed only on paper.

 

The Securities and Exchange Commission filed multiple criminal complaints throughout 2025, most recently in December charging Dr Boon, his wife, and 12 others with market manipulation spanning 369 trading days.

 

Dr Boon reportedly fled to China in September 2024, leaving behind a warrant for his arrest on charges of public fraud and money laundering.

 

The ghosts of Stark Corporation—whose accounting fraud emerged in late 2022—continued to haunt the exchange.

 

At its peak, Stark commanded a market valuation of 60 billion baht before its collapse revealed fictitious sales worth over 8 billion baht, leaving an estimated 40 billion baht in financial damage.

 

In 2025, creditors filed for the bankruptcy of Stark's majority shareholder, seeking asset seizures totalling 130 billion baht.

 

 

 

The Fundamental Friction

Beyond the courtroom dramas, the SET faced formidable macroeconomic headwinds. Initial export figures appeared resilient—posting nearly 10% growth—but this masked a significant front-loading effect.

 

Excluding temporary factors such as AI-related electronics and elevated gold exports, actual export figures contracted by approximately 2%, according to SCB Economic Intelligence Center analysis.

 

Pipat Luengnaruemitchai, chief economist at Kiatnakin Phatra Financial Group (KKP), warned that if the US maintains elevated tariffs throughout the year, Thai GDP growth could decline by 1.1 percentage points.

 

"Due to Thailand's higher trade exposure to the US, the country is expected to be more severely impacted by the new tariffs than most regional peers, with the exception of Vietnam," he noted.

 

Despite aggressive rate cuts by the Bank of Thailand—bringing the policy rate down to 1.25% by year-end—credit continued to contract.

 

Household debt hovering near 86–87% of GDP stifled domestic consumption.

 

Amonthep Chawla, chief economist at CIMB Thai Bank, observed that even after multiple rate cuts, loan growth has yet to pick up due to the slowing economy and responsible lending guidelines.

 

He warned that Thailand could risk a credit rating downgrade if the economy does not recover, noting that Moody's has already revised Thailand's outlook from "stable" to "negative".

 

Political uncertainty dealt further blows to investor confidence. The withdrawal of the coalition's second-largest party fuelled policy paralysis, delaying budget disbursement and crucial fiscal support.

 

Amonthep emphasised that heightened political uncertainty has dampened investment, with both domestic and foreign investors increasingly hesitant and many delaying or reconsidering decisions.

 

The Thai baht's 8% appreciation against the US dollar—reaching its strongest level in four years—acted as a "shock amplifier", hurting export competitiveness and tourism recovery.

 

Most alarmingly, KKP economists warned that Thailand is experiencing "premature deindustrialisation"—the manufacturing sector is contracting before the country achieves high-income status.

 

Pipat characterised Thailand's situation as "old blessings are weakening, new blessings have not arrived," forecasting that Thailand could slip from the second-largest GDP in ASEAN to fifth place within a few years without structural reforms.

 

 

 

 

Regulatory Response

Both the SEC and SET have proposed sweeping regulatory reforms aimed at preventing future abuses: tightening backdoor listing requirements, revising cash company criteria, and enhancing disclosure requirements for shareholders.

 

However, enforcement challenges remain acute.

 

As the OECD noted in its 2025 Capital Market Review of Thailand, financial penalties in civil cases are often too low to effectively deter misconduct, whilst procedural inefficiencies hinder the ability to build cases against directors successfully.

 

 

 

The 2026 Outlook: A Languid Recovery

Gone are the bullish forecasts of early 2025, when brokerages projected year-end targets of 1,550 points. Today, the consensus hovers around 1,400 to 1,430 points—a modest recovery predicated on fragile pillars.

Major research centres project GDP growth between 1.5% and 1.8% in 2026—the slowest pace in over three decades, excluding crisis years. SCB EIC forecasts 1.5% growth, whilst K-Research projects 1.6%.

 

KKP's Pipat forecasts 1.6%, warning of a concerning disconnect between export figures and actual industrial production.

 

"This suggests that much of the trade activity represents trans-shipment rather than genuine domestic production," he explained.

 

The Bank of Thailand is expected to cut the policy rate to 1.0% in early 2026, though the effectiveness remains constrained by structural challenges.

 

Pipat noted, "We continue to expect two more rate cuts in 2025 and another cut in 2026, with risk of further cuts, considering the downside risk from slower tourism, earthquake, and the US tariffs."

 

Markets are pricing in a potential "election rally" in the second half of 2026, though this remains highly uncertain.

 

Analysts advise pivoting towards defensive sectors—utilities and telecommunications—where governance is transparent and dividends are reliable.

 

Markets are pricing in a potential "election rally" in the second half of 2026. CGS International (CGSI) sets a year-end 2026 target of 1,400 points, expecting the first half to remain pressured by domestic politics before recovering in the second half.

 

The firm anticipates support from political clarity, additional government stimulus measures, lower interest rates, and foreign capital inflows attracted by compelling valuations after underperforming regional peers.

 

Analysts advise pivoting towards defensive sectors—utilities and telecommunications—where governance is transparent and dividends are reliable.

 

Tourism provides less support than anticipated. Foreign arrivals for 2025 are projected at 32.8 to 33.3 million, marking the first annual decline since post-pandemic recovery and well below the pre-COVID level of 39.9 million.

 

Pipat noted that Chinese visa liberalisation has created an adverse flow, tripling Thai outbound tourism to China whilst Chinese arrivals to Thailand remain at just 40% of pre-pandemic levels.

 

Despite challenges, several themes offer potential: data centres and digital infrastructure remain resilient, renewable energy initiatives receive top-tier government incentives, and dividend-focused strategies gain traction.

 

However, significant risks remain. If tariffs stay elevated, SCB EIC's downside scenario projects GDP growth could plummet to just 0.4% in 2026—effectively a recession.

 

 

 

Conclusion

For Thailand's capital market, 2026 will not be about reaching new heights but about proving it can restore the bedrock of investor trust.

 

Amonthep summarised the challenge succinctly: "This prolonged subpar growth is abnormal. Thailand used to perform much better, but now its growth potential itself is being revised down. If Thailand remains stuck at around 2% growth, the risk is not just a negative outlook but an actual downgrade in ratings."

 

The true test lies ahead: can Thailand transform this crisis into meaningful reform, or will it remain mired in what has become a structural crisis of governance and trust?