After slipping below 1,400 points last Friday, the Stock Exchange of Thailand (SET) index is likely to remain on a downward trend this week, possibly reaching 1,330-1,350 points as negative factors linger, according to analysts.
Wikij Tirawannarat, senior vice-president of Bualuang Securities, said the bourse was under pressure last week from an elevated US bond yield, which continued to fluctuate moving into this week.
"If bond yields continue to rise, inflation would be affected and so too the interest rate," said Mr Wikij. "The SET remains fragile this week and an index of around 1,330-1,350 points is possible."
He urged short-term equity investors to adopt a "wait-and-see" stance.
Rakpong Chaisuparakul, senior vice-president at KGI Securities (Thailand), said while the recent decline in US treasury yields lifted sentiment in Asian equities, the credit events in China look more negative.
Country Garden, which officially announced its bond default last week, has raised more concerns about China's property market. On the domestic side, uncertainties about Thai economic stimulus remain elevated after the government again postponed its decision on the funding plan for the 560-billion-baht digital wallet stimulus, Mr Rakpong said.
The research team at Asia Plus Securities (ASPS) said factors that bear monitoring include the Israel-Hamas war and US bond yield fluctuations. In Thailand, investors are watching the digital wallet scheme and proposed land bridge.
Federal Reserve chair Jerome Powell said the strong economy and tight labour market are reasons the central bank might hike interest rates further, while the New York, Richmond and Chicago Fed presidents have mixed opinions about future interest rate increases.
"Global factors, such as the Mideast war and US interest rates, are still unclear, slowing fund flow in stocks," ASPS said in a research note on Tuesday.
"Fund outflow from risk assets continues. The baht may weaken further, slowing inflows into Thai stock markets."
While the SET index is pressured by these factors, valuation is favourable in terms of price-to-earnings ratios and earnings per share growth. This is a good sign for medium- and long-term investment, the brokerage added.