The Thai stock market slid on Monday after the Federal Reserve (Fed) chairman's mention of a half-percentage point interest rate hike at the May meeting sent global stocks tumbling.
The SET Index dropped 15.26 points or 0.9% to close at 1,675.33 points with trading worth 71.4 billion baht.
Analysts recommend export-oriented stocks as the baht's depreciation will boost demand for Thai goods.
Stocks related to the country's reopening will continue to recover but hospital stocks will continue to follow a downtrend following a decline in daily cases of Covid-19, analysts said.
Kobsak Pootrakool, senior executive vice-president of Bangkok Bank, said Jerome Powell, chairman of the Fed, said on April 21 a 0.5% policy rate hike is "on the table" at its early May meeting in a seminar with the governor of the European Central Bank (ECB) and managing director of International Monetary Fund (IMF).
On that day, the IMF warned of a slowdown in the economy and concerns about emerging markets. The ECB said it was not in a rush to raise interest rates while the Fed said it would do everything it could to bring inflation back to 2%.
Mr Kobsak said concerns about aggressive interest rate hikes sent the global stock market into a rout as fund managers and investors scramble to adjust portfolios to prepare for implications from such rate increases.
Various stock indexes adjusted quickly following the news. The Dow was down about 1,700 points, or 4.8%, while the Nasdaq fell about 900 points, or 6.5%. These are the sharpest declines in a year and a half, said Mr Kobsak.
For investment strategy, Bualuang Securities (BLS) recommends investing in tourism stocks as the government's easing of travel restriction measures such as the cancellation of the Test and Go scheme is expected to boost airport, airline and hotel stocks.
BLS's top picks for the group include Airports of Thailand (AOT), Central Plaza Hotel (CENTEL) and Erawan Group (ERW).
Meanwhile, KTBST Securities recommends export stocks that will benefit from baht depreciation including electronic goods, food and agriculture stocks whose revenues come from exports.
KTBST's picks for electronic goods include KCE Electronics (KCE) and Hana Microelectronics (HANA) whose profits will rise 6% and 5%, respectively, for every 1-baht depreciation.
Picks for food stocks include SunSweet (SUN), Charoen Pokphand Foods (CPF), Asian Sea Corporation (ASIAN) and GFPT whose profits will be up 8%, 5%, 5% and 2%, respectively, for 1-baht depreciation.