Are you familiar with SET50? Here is everything you need to know about Thailand's leading stocks.

SET50 and SET Index: Similarities and Differences

First, let’s understand the roles of the Thai stock market. This market has several main indices, and SET50 is one of them.

SET Index is the overall price index of all listed stocks on the Thai stock exchange, including REIT units. Its purpose is to reflect the overall change of the entire market.

Meanwhile, SET50 selects only 50 stocks that are carefully chosen from the market. These leading stocks often have strong financial positions, high liquidity, and are thoroughly scrutinized by market authorities. For this reason, many investors view SET50 stocks as a safer choice compared to general stocks.

What are the criteria for selecting these 50 stocks?

Getting a stock into the SET50 list is not easy; it must meet various conditions.

Eligible stocks must be common ordinary shares traded on the stock exchange and have been registered for at least 6 months. Additionally, the stock must not be in a risky situation, such as being delisted, suspended from trading, or in bankruptcy.

Financially, the stock must not be in default, and the company must have a market value ranked within the top 200. Also, retail shareholders must hold at least 20% of the total capital, and the stock must have consistent trading volume, not less than 50% of the average trading volume.

The top 50 stocks passing these criteria are included in SET50. Stocks ranked 51-55 are listed as supplementary options in case of changes. The review of the list occurs twice a year: in June (using data from June 1 of the previous year) and in December (using data from December 1 of the previous year).

Which stocks are included in SET50?

Here are 20 example stocks in SET50:

ADVANC (Advanced Info Service), a leader in information technology; AOT (Thai Airways International), managing the country’s main airports; AWC (Asset World Corporation), in real estate; BBL (Bangkok Bank), a major financial institution; BDMS (Bangkok Dusit Medical Services), in healthcare; BEM (Bangkok Expressway and Metro Public Company Limited), transportation infrastructure; BGRIM (B.Grimm Power), electric power.

Other examples include BH (Bumrungrad Hospital), BJC (Burlington Stores), BPP (Banpu Power), BTS (BTS Group Holdings), CBG (Carabao Group), CPALL (CP All), CPF (Charoen Pokphand Foods), CPN (Central Pattana), CRC (Central Retail Corporation), DTAC (Total Access Communication), EA (Energy Absolute), EGCO (Electricity Generating Public Company Limited), GLOBAL (Siam Global House).

How is the SET50 value calculated?

The calculation formula for SET50 uses weighted values based on market capitalization, which is:

SET50 Index = (Current Market Value / Base Market Value) × Base Index Value

Current market value (CMV) refers to the total market value of the 50 stocks on the calculation date. The base market value (BMV) is the market value of those 50 stocks on August 16, 1995. The base index value (Base Value) is set at 1,000 points. This method ensures that changes in the index reflect the overall increase or decrease in the combined value of these leading stocks.

Is there only SET50? How can I invest?

Once you understand the SET50 index clearly, the next question is: how can you profit from it?

The first way is to buy all 50 stocks listed, but this is very complicated, requiring a lot of time and substantial capital.

A better way is to invest through derivatives that reference the SET50, such as SET50 Index Futures or SET50 Index Options, which are more flexible and diverse.

To trade futures, you need to open a futures trading account (TFEX) with a securities company. For beginners, you must prepare documents such as a copy of your ID card, house registration, bank statement from the past 6 months, or other financial proof. In some cases, a copy of a certificate of derivative trading training may be required, along with a stamp duty fee of 30 baht.

What factors influence changes in SET50?

The movement of the SET50 index is not random; it depends on several factors.

Economic conditions play a major role. When the economy is booming and consumers are confident, money flows into the stock market massively, causing SET50 to rise. Conversely, during economic downturns, people tend to flee the stock market, leading to a decline in the index. Indicators of economic conditions include employment rate, interest rates, inflation, GDP growth, and consumer confidence indices.

Political stability is also crucial. If the country faces political uncertainty, such as government changes or internal conflicts, investor confidence drops due to perceived high risk, resulting in capital outflows from the market.

Global commodity prices also impact SET50. When gold or oil prices surge, it may indicate that investors are losing confidence in the stock market and shifting to safe-haven assets. This often negatively affects the index.

Foreign investment flows in the Thai market are significant. There are four investor groups: institutional funds, securities accounts, retail investors, and foreign investors. Foreign investors have a strong influence on SET50. When they assess the Thai economy as promising and profitable, capital flows in. Conversely, if they see risks, they tend to transfer their investments elsewhere.

Is SET50 a good choice for beginners?

For newcomers to the Thai stock market, SET50 stocks are considered a suitable starting point. Consider the following benefits:

First, stocks in SET50 are selected based on strict financial, stability, and liquidity criteria. This means you are not investing randomly but choosing stocks that have been carefully considered by market authorities.

Second, selecting stocks from the SET50 list helps reduce the risk of picking stocks arbitrarily, especially if you are still developing your stock analysis skills.

Additionally, you can invest through mutual funds that focus on SET50, managed by professional fund managers, which is a neutral and suitable method for investors lacking time.

However, regardless of your investment method, you should conduct further research, evaluate future trends yourself, and consider risks before making decisions.

SET50 stocks can be a good representative of the Thai stock market, and understanding its structure will help you make smarter and more confident investment decisions.