BOTH global and local capital markets face turbulence next year due to uncertainty about US President-elect Donald Trump actually carrying out his campaign promises among other global issues, Kirida Bhaopichitr, research director at Thailand Development Research Institute, told Thai News Agency yesterday.
Also rocking the capital markets is the Brexit negotiations between UK and EU as well as anticipated stormy elections in several EU member nations.
Moreover, there will also be an impact from the expect increase in interest rates by the US Federal Reserve which will trigger outflow of investment funds from Thailand and other emerging markets back to US.
For these reasons Ms Kirida thinks the Thai stock market could slide while the baht could weaken.
However she pointed out that both foreign investment funds and foreign investors continue to be interested in Southeast Asia because of the region’s strong economic fundamentals with growth being high as 5%.
Thailand would also benefit from this because the outlook for Thai economic growth in 2017 is 3.2%, up from 3% this year, with there being several positive factors including large state investment projects and an increase in the number of foreign tourists with there also being an increase in better grade tourists. Exports too should recover on the back of global economic recovery with TDRI expecting this to expand by 0-1% in 2017.
Meanwhile the president of the Stock Exchange of Thailand Kesara Manchusree said that most investors expect the Fed to hike interest rates at its meeting this month and if this is within the range the market anticipates then there would be minimal impact on the Thai stock market because investors already know about this move.
Mrs Kesara also warned that the global stock market will be turbulent in 2017 because changes are looming in the New Year particularly the trade policies of various countries especially US which is stressing better protection of domestic products over free trade.
While this would definitely impact Thai exports, the effect would not be substantial because Thailand has reduced its dependence on exports and instead focused on internal demand. Added to this is a good expansion of trade with AEC nations with this compensating for the US market.
Thailand’s strong economic fundamentals would enable it to handle the expected turbublence next year, Mrs Kesara added.
Economic stimulus steps
Meanwhile Permanent Secretary for Finance Somchai Sujjapongse said today that the ministry would submit more economic stimulus measures to the Cabinet to spur the Thai economy this and next year, NNT said today.
The ministry expects that around one million people would benefit from the measures.
The measures would likely result in a 3.4% economic growth in the last quarter and better steer the economy, said the permanent secretary, adding that many state infrastructure investment projects in 2017 would push the growth rate from 3.4% to 4%.
Regarding the government’s financial assistance for low-income people, Mr Somchai said money could not be transferred yet because a lot of people who registered for the financial assistance did not meet the criteria. The ministry would recheck the name list of those eligible for the assistance and transfer money to them as soon as possible.
Top: Money makes the world go round. Photo: Peter-Ashley Jackson (CC-BY-2.0)