The Thai stock market is set to face more turmoil next year as massive capital movements are expected based on interest rate hikes and several central banks tapering their quantitative easing (QE).
Exports are expected to begin recovering, but some businesses will have difficulties due to technological disruption.
Pakorn Peetathawatchai, president of the Stock Exchange of Thailand (SET), said the bourse is prepared to handle three volatile factors in 2022.
The first is a probable interest rate hike caused by pressure from the high inflation rate in the US, as the economy recovers in part thanks to increased vaccinations. Despite Omicron creating a short-term impact, vaccines are expected to be available in early 2022.
The Federal Reserve plans to reduce QE, an infusion of money into the economy, decreasing liquidity in global capital markets, which will prompt some funds to flow out from stock markets.
Investment portfolios will have to adjust as there will be a big investment move from the capital market back into the US money market, Mr Pakorn said.
"Moving investments will affect stock markets around the world. The SET's statistics indicate that each year the SET Index fluctuates in a range of 300-350 points," he said.
Second, exports will grow as the global economy rebounds. Industries that were the most affected by the pandemic will gradually recover, such as energy, tourism, real estate and finance, said Mr Pakorn.
Finally, technological disruption should be monitored by investors to identify businesses that can adapt to the period, develop alongside new technology and prosper, he said.
Soraphol Tulayasathien, the SET's senior executive vice-president, said concerns regarding the Omicron strain and the Fed's policies weighed on market sentiment in late November, causing 11.8 billion baht to flow out of the SET in November. Foreign investors sold off a total of 73.6 billion baht during the first 11 months of 2021.