Real money inflows have triggered the recent rally in the Thai equity market as political tensions have eased and the country's economic recovery momentum is gaining speed, says Deputy Prime Minister Somkid Jatusrikpitak.
"The capital inflows are real money, not hot money," he said. "If the government can maintain this momentum, it will create long-term benefits for the nation."
His comments were intended to allay fears that hot money is flooding into the country after sharp gains in the local bourse. The SET index bucked Tuesday's regional sell-off trend, rising to a two-and-a-half-year high to close 1.8% higher in hectic trade worth 95.7 billion baht.
But the SET index yesterday closed down 0.05% at 1,613.34 points in heavy turnover worth 55.9 billion baht.
The rise in the Thai bourse was attributed mainly to improving sentiment of foreign investors, who envisage continued improvement of the Thai economy, while worries about political tensions have eased, Mr Somkid said.
Foreign investors have also seen progress on infrastructure development, with many projects about to be implemented, he said, adding that eased concerns over geopolitical risks also played a part in the stock rally.
"Those factors attract more capital inflows from overseas investors," Mr Somkid said.
He brushed aside worries about the appreciation of the baht.
Bank of Thailand governor Veerathai Santiprabhob echoed Mr Somkid's comments, saying the SET rally was in line with the stronger economic fundamentals of the country.
