Trinity Securities expects global inflation, including Thai inflation, to peak in the third quarter of this year while the country's interest rate is set to rise by another 0.75% over the next 12 months to 1.5% in mid-2023.
Visit Ongpipattanakul, managing director of Trinity Securities, said Thailand's core inflation would potentially increase to 3% in August, with the potential hike in the minimum wage pushing inflation up to exceed the Bank of Thailand's target of 1-3% for 2022.
On Aug 10, the central bank's Monetary Policy Committee (MPC) raised the interest rate for the first time in nearly four years to 0.75% after the consumer price index (CPI) hovered near a 14-year high in July, driven by high energy prices.
Mr Visit said on Thursday that the rate would be lifted 0.25% on each occasion and despite the expected increases over the next 12 months, Thailand's rate would remain the lowest when compared with the rates of other Southeast Asian countries.
The baht exchange rate, meanwhile, is projected to appreciate to 34-35 baht to US dollar after it appreciated by more than 4% as of July this year -- the most among the currencies of Asean member states.
"September is normally the period for listed companies to pay a dividend. At the same time, the US's Federal Reserve (Fed) is likely to hike the policy rate by at least 0.5%. So that is the time foreign investors withdraw money from Thailand," Mr Visit explained.
Trinity also estimates that the Stock Exchange of Thailand (SET) index will reach 1,690 by the end of 2022. In the past few years, the Thai bourse has been affected by a number of crises, such as the Covid-19 pandemic, spikes in global inflation, global economic recession, and growing geopolitical conflicts such as the war between Russia and Ukraine and the tensions between China, Taiwan and the US.
Currently, stock markets around the world are now changing from "inflation fear" to "recession fear" as economic growth forecasts for the US, China and Europe are revised down. And the expectation that the Fed may lift the rates by another 0.5-0.75% in September has also fuelled concerns about a recession, he added.
Nonetheless, Mr Visit acknowledged that geopolitical tensions and fears over an economic recession caused capital flows to be attracted to Thai capital markets, especially in August. Foreign investors became net buys in the Thai market with more than 24 billion baht of investment, with another 25 billion baht in the Thai bond market.
The country's current account deficit is expected to peak in the third quarter of this year and will rise to 4% of gross domestic products (GDP) in 2023. Domestic tourism revenue is anticipated to increase to 3%,5% and 7% of GDP, respectively, in the latter two quarters of the year and the first quarter of 2023, respectively.
