Uncertainty in Russia and loan defaults in China's property sector must be closely watched because they could drag down the Stock Exchange of Thailand (SET) index, which remains under 1,500 points, say analysts.
The Thai bourse has declined for seven straight days, including a sharp drop on Monday, when confidence plunged in small-cap stocks, while news about a default by Chinese property developers rattled Asian equities.
The SET rebounded and moved in positive territory for the majority of Tuesday's trading session, but it turned red in the last hour with the index falling 0.49% to 1,478.10 points.
"The SET index could remain 'sideways down' as investors are concerned about the global economy after major central banks stressed the need to continue raising interest rates, while the recent monetary stimulus in China may not be enough to shore up the world's second-largest economy," said Rakpong Chaisuparakul, senior vice-president of KGI Securities (Thailand).
Asia Plus Securities (ASPS) said although the insurrection in Russia ended in less than 24 hours, tensions remain and could possibly flare up again, which will cause commodity prices and inflation to rise and lead to interest rate hikes.
This will hurt stock markets, while the SET index may be affected less than markets more relevant to Russia.
"Although the insurrection ended quickly, the situation in Russia is still unclear and must be watched closely. If violence breaks out, commodity prices may surge again. Notably, Russia was the world's largest wheat exporter and the third largest oil producer in 2020," ASPS said in a research note.
After the invasion of Ukraine in early 2022, oil prices jumped 76% in six months, leading to a surge of cost-push inflation and interest rate hikes.
Oil prices edged up on Tuesday, spurred by worries about political instability in Russia and possible supply disruptions. In Asia, demand prospects were supported by a market expectation that China would introduce more stimulus measures.
West Texas Intermediate climbed near US$70 a barrel after a choppy session on Monday following the weekend uprising in Russia.
Chinese Premier Li Qiang said on Tuesday that Beijing would roll out more measures to boost domestic demand, though analysts observed those promises were largely reiterations of prior statements made by officials.
