SET index poised to fall to 1,250 points as US hikes tariffs
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SET index poised to fall to 1,250 points as US hikes tariffs

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US President Donald Trump looks on, on the day he signs an executive order in the Oval Office at the White House in Washington, US, January 31, 2025. (Reuters photo)
US President Donald Trump looks on, on the day he signs an executive order in the Oval Office at the White House in Washington, US, January 31, 2025. (Reuters photo)

Stock market analysts and asset management executives now anticipate that the Thai index could fall to 1,250 points or lower in the short term after US President Donald Trump's decision to hike tariffs on imports from Canada, Mexico and China raised fears over a widening trade war and rising inflation.

The Stock Exchange of Thailand (SET) index plunged 40 points to as low as 1,275.37 when it began trading early Monday, down from Friday's close of 1,314.50. The bourse then slightly rebounded to close at 1,290.88 points by midday, down 1.8%.

Supongvorn Mianpoka, assistant managing director and chief investment officer at Tisco Asset Manaemnt, described Feb 3 as "another Black Monday" after a heavy sell-off in the US tech and AI space caused stock markets globally to dip a week earlier.

"The White House confirmed a 25% import tariff on goods imported from Canada and Mexico, plus an additional 10% tariff on Chinese goods effective as of Feb 4. It means the trade war has been triggered earlier than the market had forecast," said Mr Supongvorn.

The clear statement from President Trump clearly indicated that he not only targets China but also the rest of Asia, the Americas and also Europe as he wants the US to be a leader in these markets, he added.

According to Krungsri Securities (KSS), China already announced a retaliatory tariff of 10% on US imports and plans to file a complaint with the World Trade Organization (WTO). Canada also announced immediate counter measures with equivalent tariffs on US goods.

"The resurgence of trade war concerns is likely to negatively impact market sentiment, as it raises inflation risks due to higher product prices and economic repercussions," KSS said in a research note.

Mr Supongvorn said Tisco now foresees the SET index possibly plunging to a range of 1,200-1,250 points within the first quarter of 2025 even though the asset management firm sees the possibility of the US and China reaching a conclusion to their trade dispute.

"Trump seems to use tariff hikes as a means for US trade negotiations and the market is now in a wait and see mode for reactions from China. He also realises that hiking import tariffs causes inflationary risks to the US economy," he noted.

Higher risks of rising US inflation prompted Tisco to believe the Federal Reserve (Fed) would trim the federal fund rate only once or twice this year, instead of four cuts in its original forecast, starting from the middle of this year, Mr Supongvorn noted.

Tisco has so far projected that the SET index could hit the 1,500-1,530-point range by the end of this year, up around 10% from that of 2024, given the ongoing trend of interest rate cuts globally.

Kongkiat Opaswongkarn, founder and chief executive of Asia Plus Group Holdings, said the Thai stock market is fragile because of the domestic confidence issue while external factors deteriorate.

The decline was also caused by heavy selling of long-term equity funds and some large Thai stocks. Shares of giant retailer CP All (CPALL) declined from 52 baht apiece to 49.5 baht in early trading hours due to news that the founding family of Seven & i Holdings, the owner of 7-Eleven globally, is asking Thailand's Charoen Pokphand group to invest in a management buyout of the Japanese retailing giant.

"High tariff barriers will affect exports. China has excess capacity and a trade war with the US could cause Chinese goods to divert from the US to Asian markets. It may affect exports, which we still rely on for 60-70% of GDP," said Mr Kongkiat.

Asia Plus now anticipates the SET index to move in a range of 1,270 and 1,520 points this year.

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