Stock market analysts and asset management executives predict that the Thai index may drop to 1,250 points or even lower soon, following US President Donald Trump’s decision to increase tariffs on imports from Canada, Mexico, and China. This has sparked concerns about a broader trade war and rising inflation.
The Stock Exchange of Thailand (SET) index fell 40 points to 1,275.37 at the opening on Monday, down from Friday’s close of 1,314.50. It then recovered slightly to end at 1,290.88 points by midday, marking a 1.8% decline.
Supongvorn Mianpoka, assistant managing director and chief investment officer at Tisco Asset Management, referred to February 3 as “another Black Monday,” following a significant sell-off in the US tech and AI sectors that affected global stock markets the previous week.
“The White House confirmed a 25% import tariff on goods imported from Canada and Mexico, plus an additional 10% tariff on Chinese goods, effective as of February 4. This means the trade war has been triggered earlier than the market had forecast,” said Mr. Supongvorn.
Mr. Supongvorn added that President Trump’s explicit statement shows his intent to target not just China, but also Asia, the Americas, and Europe, aiming to establish the US as a market leader in these regions.
Krungsri Securities (KSS) reports that China has responded with a 10% retaliatory tariff on US imports and plans to appeal to the World Trade Organization (WTO). Canada has also implemented matching tariffs on US products.
“The resurgence of trade war concerns is likely to negatively impact market sentiment, as it raises inflation risks due to higher product prices and economic repercussions,” KSS stated in a research note.
Mr. Supongvorn mentioned that Tisco now predicts the SET index could fall to between 1,200 and 1,250 points in the first quarter of 2025, despite some optimism that the US and China could resolve their trade disagreements.
“Trump seems to use tariff hikes as a means for US trade negotiations, and the market is now in a wait-and-see mode for reactions from China. He also realizes that hiking import tariffs poses inflationary risks to the US economy,” he noted.
The heightened risk of rising US inflation has led Tisco to expect the Federal Reserve (Fed) to reduce the federal funds rate just once or twice this year, instead of the previously forecast four cuts, starting in mid-year, according to Mr. Supongvorn.
Tisco has projected that the SET index may reach between 1,500 and 1,530 points by the end of this year, a potential increase of around 10% from 2024, supported by a global trend of interest rate cuts.
Kongkiat Opaswongkarn, founder and CEO of Asia Plus Group Holdings, remarked that the Thai stock market is currently vulnerable due to domestic confidence issues compounded by worsening external conditions.
The market’s downturn was also driven by extensive selling of long-term equity funds and some major Thai stocks.
Shares of the giant retailer CP All (CPALL) fell from 52 baht to 49.5 baht in early trading following news that the founding family of Seven & i Holdings, which owns 7-Eleven worldwide, has approached Thailand’s Charoen Pokphand group to invest in a management buyout of the Japanese retail giant.
“High tariff barriers will affect exports. China has excess capacity, and a trade war with the US could cause Chinese goods to divert from the US to Asian markets, potentially affecting exports, on which we still rely for 60-70% of our GDP,” said Mr. Kongkiat.
Asia Plus now expects the SET index to fluctuate between 1,270 and 1,520 points throughout the year.