Despite trade tensions between China and the US, Thailand's stock market still has a positive outlook, propelled by the recent economic stimulus package and a possible upgrade in the country's sovereign credit rating, says Kasikorn Securities (KS).
The stimulus package and an anticipated upgrade of Thailand's sovereign credit rating by Fitch Ratings and Moody's Investors Service are factors boosting market sentiment for the Thai bourse, said Passakorn Linmaneechote, head of research for KS.
Continued policies to shore up domestic economic growth and ample foreign reserves are two criteria supporting a possible upgrade from the international credit rating agencies, Mr Passakorn said.
Monetary policy stimulus implemented by major central banks and interest rate cuts by central banks in emerging economies are external factors supporting a rally in the Thai equity market and act as safeguards against concerns of a global economic recession, he said.
The Stock Exchange of Thailand's main index is expected to move in a range of 1,592-1,687 points next month, with uncertainty from the Sino-US trade dispute catalysing a global recession, according to KS.
US President Donald Trump usually adopts aggressive negotiation tactics, resulting in recurring volatility in the global financial markets, but he has managed to prevent a deterioration in downside risk, Mr Passakorn said.
"We expect Mr Trump will recognise the risks and damages from higher tariffs imposed on Chinese imports," he said. "It is difficult to evaluate the negative impact after the tariffs become effective, but if cynicism between China and the US persists, this could be a factor dragging the global economy into a recession.
"Trade tensions between China and the US, Hong Kong's political protests and Brexit are considered 'fat-tail' risks, whereby potential impacts arising from these risks are difficult to gauge."
The aggregate net profits of SET-listed companies totalled 373 billion baht, down 17.1% year-on-year, in the first half. Combined sales revenue was 5.53 trillion baht, up 1.5% year-on-year.
Some 679 securities listed on the SET index, or 95.4% of a total of 712 securities, reported their first-half financial performance ending on June 30.
"First-half performance significantly declined because the economy was affected by the protracted Sino-US trade war," said SET senior executive vice-president Manpong Senanarong.