The Thai stock market is expected to remain volatile in the second quarter of this year, with analysts attributing the wild swings to concerns over rising interest rates, problems in the financial system and the risk of recession.
Recent interest rate hikes by various central banks have affected financial institutions in the US and Europe facing liquidity crunches, said Therdsak Taweeteeratham, executive vice-president of Asia Plus Securities (ASPS).
"These problems are likely to cause widespread risks to various financial institutions. If the problems are not resolved, risks could emerge in the US and European economies and they could potentially enter a recession. That would put pressure on stocks globally and the Thai market would find it hard to avoid that pressure," he said.
However, there are some positive domestic factors. For example, the Thai economy is growing based on support from the tourism sector, private investment and household consumption.
The Bank of Thailand expects GDP growth of 3.6% this year, beating the consensus global GDP growth outlook of 2.3%.
ASPS predicts listed companies to report a combined net profit this year of 1.12 trillion baht, or earnings per share of 91.8 baht, up 12.6% year-on-year. That should attract inflows to the Thai stock exchange and drive the index to 1,670 points in the second quarter, said Mr Therdsak.
Wilasinee Boonmasongthrong, a research manager at Globlex Securities (GBS), said the Thai stock market is set to move sideways this week, with investors expecting the US Federal Reserve to raise interest rates by 0.25% at its May meeting.
Much US economic data has fallen short of expectations, with the March industrial production index losing 0.5% month-on-month, compared with the market forecast of a drop of only 0.1%. March retail sales fell 1% year-on-year compared with a market forecast of a 0.4% drop.
The producer price index declined by 0.5% from the previous month, compared with a forecast of a 0.1% drop.
"Investors are monitoring bank earnings with financial statements scheduled for release on April 18-21," Ms Wilasinee said.
The brokerage expects the SET Index to move in a range of 1,580-1,620 points this week.
Factors to watch include geopolitical risks, as tensions have escalated between China and Taiwan, North Korea and South Korea, and China and the US. Meanwhile, Thailand's Public Health Ministry issued a warning about rising Covid-19 cases after the long Songkran holiday.
As for gold, GBS recommended investors monitor the release of more US economic figures after the price of the metal recently slipped below $2,000 per ounce.
"If those numbers are weak, it will give a boost to safe-haven assets such as gold and prices could rise again," she said.
GBS expects gold prices to move in a range of $1,975-2,030 an ounce this week, supported by gloomy US economic data, said Ms Wilasinee.
