JP Morgan has maintained its Thai GDP growth forecast at 3% this year, driven by consumption and tourism.
Amid rising and broadening inflationary pressures, the bank expects the Bank of Thailand to increase the policy rate by 25 basis points in each of the three remaining MPC meetings this year.
In the near term, Thailand will still face the same challenges and volatility as other countries, but JP Morgan remains optimistic that large Thai corporations have strong fundamentals that will survive through global volatility in the short term.
Filippo Gori, Asia Pacific chief executive at JP Morgan, said the company is cautiously optimistic regarding Thailand's macro outlook and maintains its GDP growth forecast of 3% for 2022.
He said the recovery will likely be driven by services and private consumption as tourist flows normalise, but downside risks remain from tightening external financial conditions and a potential slowdown in global trade.
Mr Gori said the equity capital markets in Southeast Asia may see some appetite after the summer, but perhaps not before a stabilisation of markets in which both issuers and investors can find comfort in coming back to the table.
Specific to Thailand, in the near term the market will experience challenges and volatility similar to other countries in the region, although domestic capital markets remain liquid.
In the long term, JP Morgan maintains a positive outlook for Thai capital markets. Major Thai corporates have strong fundamental businesses that will persist through the short-term volatility. Medium-to large-sized private firms will ultimately look to public capital markets to raise funds, especially as firms look to expand overseas.
The appetite will be driven by a recovering economy as tourism continues to rebound amid a stabilising pandemic.
He said the trends that will shape the future of this sector in Asia Pacific include the growth of the intra-Asia Pacific trade corridor, which is almost as lucrative as the US-China corridor and worth around US$5 trillion, as the corporates headquartered in the region continue their overseas expansion.
JP Morgan is also seeing tremendous growth within the pension fund industry and expects more than a third of the top 20 global pension funds to eventually be based in Asia.
Of the large corporates in the region, about a third of those publicly listed in Thailand are also still family owned, compared to just a single digit percentage in the US. This implies huge potential for transactions in the future, he said.
"Increasingly, we are seeing a lot of activity in the private markets, whereby you tap the equity market in a private fashion, for example pre-initial public offering financing pipe deals, which are becoming more and more popular compared to a few years ago," he said.
For the external factors, the bank recommends monitoring US interest rate hikes, the pandemic, economic growth and employment rate, and geopolitical tensions could escalate further and create more disruptions around the world.
