Thailand Stock Market Plunges: Global Trade War Impacts Bangkok
Global financial markets experienced a tentative recovery yesterday, following a sharp selloff, as Asian equities edged higher. This fragile rebound comes amidst escalating trade tensions that continue to rattle investor confidence, prompting increased demand for safe-haven assets like gold. The precious metal reached a record-breaking $2,993.80 per ounce on Friday, fueled by uncertainties surrounding US tariffs and growing anticipation of US interest rate cuts.
The Thai stock market, reflecting broader global anxieties, traded below the 1,200-point mark throughout the week. According to the Stock Exchange of Thailand (SET), the market has entered a correction phase, plummeting 17.9% from its cyclical peak at the end of February. This week, the SET index fluctuated between 1,157.96 and 1,196.52 points, ultimately closing yesterday at 1,173.76, a 2.4% decrease from the previous week. Trading volume remained subdued, averaging just 39.04 billion baht daily. Interestingly, retail investors were net buyers, injecting 8.62 billion baht into the market, followed by institutional investors at 1.45 billion baht. Conversely, foreign investors withdrew 8.29 billion baht, while brokerage firms sold off 1.78 billion baht.
The current global economic landscape is fraught with uncertainty. Trade disputes persist, with the European Union targeting €26 billion worth of US goods in retaliation for President Trump’s steel and aluminum tariffs. This tit-for-tat escalation extends to tariffs on whiskey and wine, creating a complex web of trade barriers. Meanwhile, Tesla, the electric vehicle manufacturer, has expressed concerns about the impact of a trade war on its manufacturing costs and international competitiveness.
Adding to the complexity, economic indicators present a mixed picture. US consumer and producer inflation cooled in February, potentially signaling a slowing economy and increasing pressure on the Federal Reserve to cut interest rates. China, the world’s second-largest economy, experienced deflationary pressures, with a sharper-than-expected drop in consumer and producer prices. The Bank of Canada, acknowledging the impact of trade uncertainty, lowered its key interest rate.
Amidst this volatility, Thailand is actively pursuing a free trade agreement with the European Union to enhance economic security. Domestically, the government has implemented various economic stimulus measures, including tax incentives for ESG investments, a digital wallet program, and support for the struggling automotive sector. These initiatives aim to mitigate the negative impacts of global trade tensions and boost domestic consumption.
Looking ahead, a busy week of economic data releases and central bank decisions is anticipated. The US will release core retail sales figures, while the Bank of Japan and the Federal Reserve will announce interest rate decisions. These announcements will provide further insights into the global economy’s health and the trajectory of monetary policy. In Thailand, the economic outlook will be discussed by SCB EIC, offering a local perspective on the current economic climate. Despite the challenges, some analysts remain cautiously optimistic about the Thai stock market, citing inexpensive valuations and high dividend payments as potential supporting factors. However, the ongoing uncertainty surrounding US trade policy remains a significant risk.
