Capital outflows from Thailand’s stock market are expected to persist and could reach a five-year high of 200 billion THB this year, mainly due to the US’s macroeconomic policies, says Asia Plus Securities (ASP).
With such a bearish projection, the Stock Exchange of Thailand (SET) index could plunge to 1,500 points in the coming period, with the baht depreciating to 34 against the US dollar amid concerns over a global trade war and a faster pace of interest rate normalization by the US Federal Reserve, said senior executive vicepresident Poranee Thongyen. If the US imposes up to US$250 billion (8.25 trillion baht) in tariffs on Chinese imports, this would subsequently hit global economic growth, Poranee said.
Attractive US interest rates could suck up to 200 billion THB out of the Stock Exchange and sink the baht to 34-per-dollar by the New Year. SET-listed firms’ net profit would also decrease by 20% as a result of the US’s protectionist trade measures, she said. To reduce a massive trade deficit with China and fulfill his campaign pledge, US President Donald Trump has vowed to impose tariffs on $50 billion in Chinese goods, ranging from dishwashers to aircraft tires. The first tariffs are due to come into effect on July 6.
Foreign fund outflows from the SET in the first six months, meanwhile, were logged at 180 billion baht, coming close to the peak of capital outflows in 2012 registered at 190 billion, ASP said. Capital outflows could likely hit a record high as negative factors persist, Poranee said. Foreign investors have been selling local equities over the past five years and could remain net sellers this year if the US persists in protectionist measures and further raises its policy rate, she said. The global trade war will indirectly pressure the baht, with the local currency expected to weaken to 34 baht to the dollar by year-end, she added.
– Bangkok Post