Thai and other Asian stock markets tumbled on Monday, with the regional benchmark approaching a two-year low last seen in mid-July, as investors fled risk assets after the US Federal Reserve signalled that it would keep raising interest rates to rein in inflation.
Fed chairman Jerome Powell's hawkish remarks at the Jackson Hole Symposium on Friday night led markets to believe the Fed would maintain its tight monetary policy and increase the US policy rate higher and for longer than expected, analysts said.
Rates are heading higher and will stay there "for some time", Mr Powell said in his speech.
Although it could hurt the economy, he said it would be worse if the central bank did not maintain price stability.
His stern message raised the probability that the Fed would vote for a policy rate hike of 75 basis points at its meeting in September. As a result, the dollar index and US bond yields increased.
However, Finansia Syrus Securities (FSS) believes the Stock Exchange of Thailand (SET) Index would fall less than its peers in the US and Asia, due to the country's promising economic outlook. "It breaks rank from other regions, which are in retreat and risk recession next year," said FSS's head of research Jitra Amornthum.
On Friday, the Dow Jones Industrial Average plunged 1,008.38 points, or 3%, to close at 32,283.40, in its largest percentage drop since May 18. The S&P 500 dropped 141.46 points, or 3.4%, to finish at 4,057.66, in its biggest percentage decline since June 13, and the Nasdaq Composite dipped 497.56 points, or 3.9%, to end at 12,141.71, its largest percentage drop since June 16.
Dow Jones Industrial Average futures fell more than 250 points, or 0.8%, on Sunday night, while S&P 500 futures and Nasdaq-100 futures lost more than 1% each. Asian stocks, meanwhile, opened 1% lower on average Monday morning.
The SET index closed on Monday at 1,626.52 points, down 1.11%, in trade worth 71.42 billion baht, in line with the global bearish sentiment. In the short run, high-growth tech stocks and finance are expected to see pressure, while domestic plays should outperform for the mid-to-long run.
FSS recommended investors wait to accumulate more bets on the weakness, and maintained its bullish view of the SET in the second half due to the economic outlook prospects for 2023.
Krungsri Securities research noted Fedwatch was overweight on the Fed's next interest rate hike being 75 basis points on Sept 20-21. It recommended investors selectively buy banking stocks such as Kasikornbank, Bangkok Bank, and Siam Commercial Bank. Krungsri also picked PTT Exploration and Production and Thai Oil for the energy sector, and tourism-related shares such as BDMS, BH, Central Plaza Hotel and Asia Aviation.
Krungthai Asset Management said investors should invest in energy and commodity mutual funds to beat high inflation and interest rate hikes, both of which are expected to continue for several months.