Global interest rates are projected to reach a ceiling later this month as inflation fears have eased and several central banks are starting to worry about the impact of aggressive monetary policies on the global economy, says Tisco Securities.
The Reserve Bank of Australia and the Bank of Canada have started to slow their rate hikes over the past month, reflecting their belief that the recent monetary policy tightening is adequate to curb inflation, said Apichat Poobunjirdkul, senior strategist for Tisco Securities.
Central banks are also concerned about the impact of strict monetary policies that could put the global economy on the verge of a recession, he said.
October inflation in the US, which is scheduled to be announced later this month, is expected to fall below 8% for the first time in eight months. If so, investors should regain confidence in the stock market, said Mr Apichat.
The Federal Reserve is conducting a two-day meeting and the market widely expects it to lift rates by 75 basis points at the conclusion late Wednesday, he said.
"Tisco views the global rate hikes as approaching an end, with the peak of the Fed's rate hikes unlikely to exceed the market's estimate of around 5%," said Mr Apichat.
Analysts also predict bond yields and the US dollar passed their peak last month, with the timing appropriate for investment in risk assets, especially in the emerging stock markets.
For the Stock Exchange of Thailand (SET), the index rebounded to pass the 1,600-point level. Tisco projects the SET index to move in a range of 1,550-1,650 points for the rest of the year.
The Thai bourse will continue to outperform peer stock markets through next year based on Thailand's economic recovery, said Mr Apichat, citing the country's reopening and the upcoming national election as factors supporting the growth.
Tisco's recommended stocks projected to benefit from the domestic economic recovery for the rest of 2022 including Bangkok Commercial Asset Management (BAM), Bangkok Dusit Medical Services (BDMS), CP All and Siam Commercial Bank (SCB).
Asia Plus Securities (ASPS) believes investor concerns about high inflation, interest rate hikes and a recession have receded along with a decrease in Covid-19 infections.
The Thai economy has recovered better than many other countries, said the brokerage. Thailand is hosting the Asia-Pacific Economic Cooperation summit this year, which should attract more foreign investors and tourists, ASPS said in its recent research. As a result, ASPS expects foreign funds to continue to flow into the Thai stock market for the rest of the year.
