United States President Donald Trump has proclaimed the beginning of "America's Golden Age" and already issued dozens of executive orders in his first week in office.
During his 45-minute inaugural speech on Monday, Trump emphasised a "common sense revolution" to restore American greatness, outlining six immediate initiatives:
- Declaring a southern border emergency and carrying out mass deportations, while designating drug cartels as foreign terrorist organisations.
- Establishing an External Revenue Service for customs tax collection.
- Creating a Department of Government Efficiency.
- Introducing "Pax Trumpiana" -- an unpredictable foreign policy approach incorporating "madman theory" and business-style negotiations, including Gaza ceasefire plans and recovery of the Panama Canal.
- Repealing predecessor Joe Biden's Green New Deal and reviving US manufacturing.
- Declaring an energy emergency with a "drill, baby, drill" policy to strengthen the US energy sector and combat inflation.
Major research institutions predict these policies will actually slow economic growth while increasing inflation. The International Monetary Fund projects global economic growth could decrease by up to 0.8 percentage points in 2025, worsening in 2026.
Goldman Sachs forecasts a 1% economic decline and 3% inflation spike in a worst-case scenario (10% global tariffs), while its base case (20% tariffs on Chinese imports, as well as tariffs on European vehicles) suggests a 0.5% inflation increase with minimal economic impact.
The US Federal Reserve is expected to step up the pace of interest rate cuts, matching the European Central Bank's approach.
Based on current economic indicators showing reduced demand-pull inflation and slowing retail sales, both the Fed and the ECB are projected to cut rates twice this year.
We expect US Treasury markets to show divergent patterns, with short-term yields maintaining stability around 4.28% for 2-year bonds, while 10-year yields are projected to rise but remain capped at 4.9% due to budget deficit concerns and inflation risks.
The US dollar outlook suggests temporary strength, though Trump's documented preference for a weaker currency to help exports could limit sustained appreciation.
Meanwhile, the baht is expected to experience modest depreciation, cushioned by synchronised monetary policy adjustments between the Fed and Bank of Thailand interest rate trajectories.
For Thai markets, increased volatility is expected due to Trump's policies as well as domestic investment concerns.
In the short term, the Stock Exchange of Thailand is expected to move little, with significant resistance around 1,400 points.
External factors in terms of the economy and interest rates seem better, including strong fourth-quarter earnings at US companies and Trump toning down some of his earlier trade threats, allowing the market to relax.
However, domestic factors (apart from government stimulus) are fragile from lack of confidence, causing the Thai market recovery to lag others in the region.
There are no significant signs of foreign fund flows returning to buy Thai equities.
Our investment strategy for the near term is "selective buy", with three main themes:
- Stocks expected to benefit from shopping around Chinese New Year and from stimulus: the Easy E-Receipt tax deduction runs until Feb 28, and the second phase of the 10,000-baht handout for 4 million Thais age 60 older is paid on Jan 27. Expected beneficiaries include commerce stocks (CRC, HMPRO, CPALL and TNP), consumer goods (CBG and OSP), tourism (MINT and AOT) and food products (CPF and BTG).
- For investors wishing to generate cash flow for their portfolios, look for stocks offering dividend yields above 3% on 2024 earnings, with strong balance sheets and continued growth in 2025: AP, KTB, BBL and PTT.
- Earnings plays: companies whose share prices have not risen to reflect yearly and quarterly growth in fourth-quarter 2024 profit, which may pay regular dividends: ADVANC, TRUE, AMATA, AWC and AU.
Dr Piyasak Manason heads the Investment Strategy Department, INVX-Research Group, at InnovestX Securities
