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38.01x
Highest P/E Ratio (2000)
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5.70x
Lowest P/E Ratio (1998)
16.58x
Long-Term Average P/E
SET Index vs. P/E Ratio (1995-2023)
This chart illustrates the relationship between the SET Index's closing price and its Price-to-Earnings (P/E) ratio. Vertical bands highlight periods of significant global and regional economic events, demonstrating their profound impact on market performance and investor valuation sentiment.
📈 What is the P/E Ratio?
The Price-to-Earnings (P/E) ratio is a key valuation metric. It is calculated by dividing the market price per share by the earnings per share. A high P/E suggests that investors expect higher future earnings growth, while a low P/E might indicate an undervalued stock or that the market has lower growth expectations.
💥 The 1997 Asian Financial Crisis
The crisis began in Thailand and had a catastrophic impact. The SET Index plummeted, and the P/E ratio hit its lowest point in 1998. This reflects a massive loss of investor confidence and a severe contraction in corporate earnings, creating a period of extreme undervaluation.
🌍 The 2008 Global Financial Crisis
Originating in the US, this crisis led to a sharp, synchronized downturn in global markets. The SET Index saw a significant drop of over 47%, and the P/E ratio compressed dramatically as fear drove investors away from equities worldwide, impacting earnings and valuations across the board.
👑 Post-Crisis Recovery & Booms
Following major crises, the Thai market has shown resilience. The periods after 1998 and 2008 were characterized by strong rebounds in both the SET Index and P/E ratios. These recoveries were fueled by restored confidence, economic stimulus, and a return to earnings growth.
🦠 COVID-19 Pandemic Impact (2020)
The pandemic caused an initial market crash, but also unprecedented fiscal and monetary stimulus. This led to a peculiar situation where the P/E ratio spiked to its highest recorded level. This was caused by a sharp but temporary drop in corporate earnings while market prices recovered quickly in anticipation of a swift rebound.
💡 Key Takeaway
The P/E ratio is a cyclical indicator. It tends to be lowest during market panics (offering potential buying opportunities) and highest during periods of peak optimism or unusual economic conditions. Understanding its historical context alongside major events is crucial for long-term investment strategy.
Future Outlook
Being a mature and more sophisticated market in terms of SE Asia, Many Thai companies are expanding into the surrounding growth areas like the Philippines and Indonesia to capitalize on regional neighbors with more favorable demographics and economic growth in the region. Combined with AI’s ability to improve productivity in the Thai work force there is an opportunity for Thailand to overcome these potential set backs for growth. This coupled with optimism surrounding the new government could explain why the current P/E Ratio is sitting above expectations.