SET50, the main index that Thai investors should not overlook

What is SET50 and Why Is It Important for Your Portfolio

Before diving into SET50, it’s important to understand that the Thai stock market has many indices. The SET Index is the main index that covers all, while SET50 is a “child” or subsection that is specially recognized.

In fact, SET50 is a price index that reflects the movements of the 50 highest-quality stocks on the Stock Exchange of Thailand. These stocks are selected through strict criteria, have large market capitalization, strong financial structures, and good liquidity.

The relationship between the SET Index and SET50 is similar to that between “the entire population” and “the leading sample group.” When SET50 rises, the SET Index usually follows because the stocks in SET50 have the highest weight in the market.

Additionally, SET50 serves as an underlying asset( for derivative instruments such as SET50 Index Futures and SET50 Index Options, which are tools for traders seeking to )hedge( or )speculate(.

How Strict Are the Criteria for Selecting Stocks into SET50

Not all stocks listed on the stock exchange can enter SET50. There are specific rules:

Basic Requirements:

• Must be common stocks traded on the Thai stock market and registered for at least 6 months
• Not under delisting or suspension from trading )SP( for an extended period
• Not in default or facing financial issues that threaten stability
• Not stocks of companies undergoing bankruptcy, restructuring, or liquidation

Size and Liquidity Requirements:

• Must be among the top 200 stocks by Market Capitalization
• Have retail shareholders accounting for at least 20% of paid-up capital
• Must have consistent trading volume, not less than 50% of average trading value

After filtering by these criteria, the top 50 are included in SET50, while ranks 51-55 are reserve list to replace members that exit.

The SET50 list is reviewed twice a year: June )using data from June 1 of the previous year to May 31(, and December )using data from December 1 of the previous year to November 30(.

The 50 Leading Stocks in SET50 - What You Should Know

SET50 includes leading stocks from various sectors such as:

• ADVANC )Advanced Info Service( - Technology
• AOT )Airports of Thailand( - Transportation/Infrastructure
• AWC )Asset World Corporation( - Real Estate
• BBL )Bangkok Bank( - Finance
• BDMS )Bangkok Dusit Medical Services( - Healthcare
• BEM )Bangkok Expressway and Metro( - Transportation
• BGRIM )B. Grimm Power( - Energy
• BTS )BTS Group Holdings( - Mass Transit
• CPALL )CP All( - Retail
• CPF )Charoen Pokphand Foods( - Food and Beverages
• CPN )Central Pattana( - Retail/Real Estate
• DTAC )Total Access Communication( - Telecommunications
• EGCO )Electricity Generation( - Energy

What makes these stocks part of SET50 is their status as “blue chip” – reputable companies with stable performance, good dividend yields, and lower risk compared to other stocks.

How to Calculate SET50 - Use Formulas or Understand the Principles

Don’t think that calculating SET50 is complicated. There’s a simple formula:

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

Where:

• Current Market Value )CMV( = the total market value of all 50 stocks at the current prices on the calculation day
• Base Market Value )BMV( = the total market value of all 50 stocks on the base date )August 16, 1995(
• Base Value = 1,000 points )initial value(

This method is called “market capitalization weighted” – stocks with larger market caps have more influence on the index. So, if smaller stocks fall but large stocks rise, SET50 can still go up.

Economic and Political Factors Driving SET50

) 1. Macroeconomic Conditions When the economy is growing, consumers and businesses are more confident, leading to increased investment inflows into the stock market, which pushes SET50 higher.

Conversely, if economic indicators weaken ###GDP slows, unemployment rises, inflation heats up(, investors become cautious and retreat, causing SET50 to decline.

Key indicators include: GDP growth rate, interest rates, inflation rate, consumer confidence index.

) 2. Political Stability and Governance Countries with high political stability attract more investment. If political crises occur ###coups, protests, tensions(, risks increase, and SET50 tends to fall.

) 3. Global Commodity Prices Commodity prices such as rice, rubber, copper, and gold, when rising, often indicate investors seeking safe assets, which can signal increased market risk. High gold prices, for example, may lead to a decline in SET50.

4. Foreign Investment Flows ###Foreign Inflows(

Foreign investors )“Foreigners”( have a significant weight in SET50 because of the large capital they bring. When they view the Thai economy positively, they buy Thai stocks heavily, pushing SET50 up. Conversely, if foreigners become cautious and withdraw funds, SET50 drops.

Thai investors are divided into 4 groups: Institutional investors )“Funds”(, Prop traders ), Securities firms(, Retail investors ), and Foreigners (.

How to Invest in SET50 - Choose Based on Your Convenience

If you want to enter the SET50 market, there are several options:

) Option 1: Buy the 50 stocks directly Theoretically possible, but in practice complicated and costly. Managing 50 stocks also requires time for monitoring and rebalancing(.

) Option 2: Invest in SET50 Index Futures ###TFEX( This is a popular choice because it allows speculation on index movements. You need to open a futures trading account )TFEX###. These contracts offer high leverage, so they can generate high profits but also carry high risk of loss.

Steps to open a TFEX account:

• Prepare 2 copies of ID card
• Prepare 2 copies of house registration
• Recent bank statement (last 6 months) or other financial proof, 2 copies
• Certificate of completed derivatives training (if available)
• Stamp fee of 30 Baht
• Submit to a securities company and wait for approval

( Option 3: Invest in SET50 mutual funds For beginners, this is the easiest and safest option. The fund manages everything; you just buy units and wait for returns. Commissions are deducted, but it’s suitable for those lacking time or skills.

Conclusion: SET50 Is a Good Starting Point

SET50 includes carefully selected stocks, safer than regular stocks, with high liquidity. If you are a beginner, investing in SET50 products or SET50 mutual funds is the best approach.

However, no matter which method you choose, you should study economic indicators, follow political news, and analyze market trends. SET50 may seem safe, but the stock market still carries risks. Remember to implement )risk management( strategies and set clear investment goals.