SET50 Main Index: The Complete Guide for Investors

Get to Know SET50 Before Making Investment Decisions

In the world of Thai stock market investing, the term SET50 is a phrase you might hear frequently. But what exactly is SET50? Many people may still not fully understand.

Let’s start with the basics: SET is a stock price index that includes all listed stocks on the stock exchange, covering both common stocks and REIT units that meet the market’s criteria. SET50 is a subset of SET, consisting of the top 50 high-quality stocks selected from the index.

If we compare SET50 as a complete representative of SET, because SET50 reflects the movement of the major giant stocks, when SET50 rises, SET generally tends to rise as well. This characteristic makes SET50 a benchmark index (Benchmark) used for issuing various derivatives such as SET50 Index Futures and SET50 Index Options.

Many new investors focus on stocks in the SET50 list because they believe these stocks are safer than regular stocks. This is a reasonable assumption, as stocks in SET50 are carefully selected and mostly large companies with strong financial positions. However, analyzing and assessing the trend of each stock remains the responsibility of the investors themselves.

Strict Standards and Criteria for Selecting SET50

Stocks eligible for inclusion in the SET50 index must meet at least the following criteria:

Basic Conditions:

• Common stocks traded regularly on the stock exchange and registered for at least 6 months.
• Not undergoing delisting procedures.
• Not restricted from trading (SP) or showing signs of long-term trading bans.
• No debt repayment issues that could affect the company’s economic stability.
• Not stocks of companies in bankruptcy, undergoing rehabilitation, or in liquidation.

Valuation Criteria:

• Market capitalization (Market Capitalization) ranked within the top 200.
• Minority shareholders must hold at least 20% of paid-up capital.
• Trading volume is consistent and not less than 50% of the average trading value under normal market conditions.

Stocks passing the top 50 ranking will be included in the SET50 list, while ranks 51-55 serve as reserves. The list is reviewed semi-annually, using six months of historical data in June and similar data in December.

Key Components of SET50

The SET50 list includes representatives from various industry sectors, such as:

• ADVANC: Advanced Info Service Public Company Limited
• AOT: Airports of Thailand Public Company Limited
• BBL: Bangkok Bank, a leader in banking business
• BTS: BTS Group Holdings Public Company Limited
• CPALL: CP All Public Company Limited
• CPN: Central Pattana Public Company Limited
• DTAC: Total Access Communication Public Company Limited
• EGCO: Electricity Generating Public Company Limited

And many other companies that have decided to join this group. These stocks cover banking, real estate, telecommunications, energy, and food manufacturing sectors.

How is SET50 Calculated?

The calculation of the SET50 index uses a weighted method based on market capitalization, with the formula:

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

where:

• Current Market Value (CMV) refers to the total market value of all SET50 stocks on the calculation date.
• Base Market Value (BMV) is the total market value of SET50 stocks on the base date, August 16, 1995.
• Base Value is the index’s base point, set at 1,000 points.

This method causes larger stocks to have a greater influence on the index’s movement than smaller stocks.

Main Factors Affecting SET50

( 1. Overall Economic Conditions

When the economy improves, people gain confidence in investing, leading to increased capital inflow into the stock market. SET50 tends to rise accordingly. Conversely, during economic downturns, fear and uncertainty cause funds to exit the market.

Positive economic signals include rising employment rates, strong GDP growth, moderate inflation, and higher consumer confidence indices.

) 2. Political Stability and Social Environment

Countries with stable political systems and peaceful social environments attract more investors. Conversely, issues like coups, protests, or political conflicts can annoy investors and potentially lead to reduced investments.

( 3. Trends in Commodity Prices

When commodity prices such as gold rise rapidly, investors tend to move funds out of stocks into safe assets due to increased risk, causing SET50 to weaken.

) 4. Foreign Investment Flows

Foreign investors (Foreign Fund) play a significant role in the Thai stock market. When they see Thailand as a good investment destination, capital flows into SET50 increase. If they withdraw, SET50 declines.

How to Invest in SET50 Effectively

If you’re interested in investing in SET50, there are several options:

Option 1: Buy individual stocks within SET50

Theoretically, you could buy all 50 stocks listed, but this approach has disadvantages: it requires a large amount of capital, managing these stocks is complex, and tracking them demands significant time.

Option 2: Use Futures Contracts (Futures)

Trading SET50 Index Futures is a more efficient method, allowing you to understand and trade the direction of SET50 directly.

To trade futures, you must open an account with a securities firm. Required documents typically include:

• ID card or other identification with a copy
• House registration with a copy
• Bank statement from the past 6 months or other financial proof
• Derivatives trading knowledge certification (if available)
• Stamp duty fee of 30 Baht

Option 3: Invest through mutual funds

For beginners, investing in mutual funds that focus on SET50 stocks is a good choice. It provides stability and appropriate risk management.

Summary

Deep understanding of SET50 is a crucial tool for investors aiming to enter the Thai stock market. Whether you choose to buy individual stocks, trade futures, or invest in mutual funds, studying the information and considering factors influencing SET50 will help you make more reasonable decisions.

Ultimately, SET50 is not just a number on the screen but reflects the health of the economy and market confidence in Thailand. Careful and long-term investing is the best way to build assets through SET50.