Thai stocks climbed by the most since March last year, with the baht also rallying on optimism over policy continuity after the formation of the new government.
The benchmark Stock Exchange of Thailand Index advanced as much as 2.9%, with packaging, information and technology, and petrochemical companies leading the gains.
The index closed up 38.79 points, or 2.84% from the day before, at 1,404.28, with heavy turnover worth 81.7 billion baht — about double the average of recent weeks.
The SET Index has not finished a week above 1,400 points since the second week of January.
The baht rose as much as 1.5% against the US dollar to 33.69 — the strongest level since May last year.
A strengthening local currency will make Thai stocks more alluring for dollar-based investors. So far this month, foreign investors are still net sellers of Thai shares. For the year to date they are net sellers of 127.4 billion baht.
Global funds have poured $133 million into Thai bonds in September so far, the third straight month of net foreign inflows.
Thai assets have also been boosted by the signs that the US Federal Reserve is ready to start cutting interest rates when it meets next week.
As well, political risk is seen as easing following the appointment of Prime Minister Paetongtarn Shinawatra and her cabinet.
“There is an increasing confidence from investors,” said Tareck Horchani, head of prime brokerage dealing at Maybank Securities. “After government deliberation on policy, they can start the cash handout policy and other stimulus measures.”
The handout policy, involving 10,000 baht to be given to eligible Thais over age 16, is expected to start this month. Initially, it is possible that only the most needy will receive the money, and it will be in the form of cash. Distribution of digital money to millions more people could come later.
Investors are also optimistic about the creation of a new Vayupak Fund by the government to invest in local shares to prop up the market.