Analysts are bullish on the Thai stock market's prospects in 2023 after China announced the country's reopening in January, while cryptocurrency is likely to remain volatile in the first six months, perhaps improving in the latter half when inflation eases.
For crypto investors, 2022 was a lost year, with many crypto prices plunging by between 70% and 90% since the end of last year. The market is likely to fluctuate in 2023, with investors urging advocates to hold cash until a clearer direction becomes evident.
Given the negative factors in the macroeconomy, liquidity in the world market declined following several consecutive interest rate hikes in the US. The Federal Reserve's policy rate is now 4.5% and it is expected to peak at around 5% to 5.5% in the first half of 2023.
The US central bank also plans to further reduce liquidity by using quantitative tightening.
As for the market outlook in Thailand, brokers say stocks have a recovery path after inflation cooled and interest rates neared a peak.
Bualuang Securities has a very positive view for stock investment, forecasting the Stock Exchange of Thailand (SET) index to hit 1,820 points in the first half of 2023 on the back of a recovering economy.
However, various risk factors remain, led by US inflation and looming economic recession. Meanwhile, the reimposition of the share sales tax in Thailand could potentially lower market sentiment by reducing trading liquidity, especially from foreign investors.
Recommended shares for 2023 are in the tourism sector and related industries, as well as technology stocks in the US, China and other Asian markets.
Asia Plus Securities said the reopening of China from Jan 8 would accelerate the return of Chinese tourists. This would have a positive effect on the overall growth of the Thai economy and make the country's stock market stand out in the region while tourism stocks benefit directly.
With regard to the crypto market, experts said the market is largely influenced by the global economy which is currently stuck with short-term volatility.
With US inflation at the highest level in 40 years, this prompted central banks in many countries to follow the Fed by raising policy rates in an effort to reduce inflation, said Jirayut Srupsrisopa, founder and group chief executive of Bitkub Capital Group Holdings Co, Thailand's crypto market leader.
The Fed aims to bring the rate of inflation down to 2%, from about 7% at present, meaning that a continuation of interest rate increases would be seen throughout 2023.
Reducing inflation is more difficult than creating it, he noted.
"We are now in an era where every asset is affected by short-term volatility, not only cryptocurrencies or stocks. Even the price of gold, which is a safe asset, has decreased, prompting people to spend less," said Mr Jirayut.
"During the final quarter of 2022, we saw a trend that many companies around the world were trying to maintain costs through layoffs, especially companies related to technology as technology stocks saw their prices slide significantly," he added.
"The advice for the business sector is keep as much cash as possible, don't spend on anything unnecessary and upgrade products by investing in technology or upskilling human resources. If there is a real recession, keeping cash is the best thing to do," he said.
Ravit Paiboonworachat, business development manager at Upbit Exchange (Thailand), said when the crypto market declines, it normally takes about two years to recover. In this case, that recovery is expected to take place late next year or in 2024.
The collapse of many crypto platforms has caused investors to lose their confidence. Coupled with the global economic slowdown, fewer crypto trades can be expected, he said.
According to coingecko.com, the total market capitalisation of the cryptocurrency market as of Dec 27 was US$846 billion, down sharply from the peak of $3.1 trillion on Nov 10, 2021.
The price of Bitcoin at that same point in time stood at $16,835, down 75.6% from its peak of $69,045.77, while the second largest coin, Ethereum, was quoted at $1,219, representing a drop of 75% from its peak of $4,878.26 on Nov 10, 2021.
The price of KUB coin on the Bitkub exchange stood at 62 baht on the same day, a sharp decline from its peak of 580 Baht on Dec 28, 2021.
