Thai equities have limited upside in the second quarter amid prolonged global trade tensions, while the gold outlook has turned cautious, according to brokerages.
Pi Securities sees the Thai stock market in a phase with little upside this quarter, following a 13% rebound in the Stock Exchange of Thailand (SET) index from its recent lows. The recovery was supported by positive developments in global trade negotiations, especially the US decision to postpone its tariffs for 90 days.
However, Pi expects these negotiations to be prolonged and inconclusive, similar to the 2018-2019 trade dispute cycles.
Even if some progress is made, the brokerage believes global economic growth will remain constrained due to persistent geopolitical tensions, particularly between the US and major trade partners such as China. The possibility of Washington fully abandoning tariffs on Chinese imports is likely slim, raising concerns over continued disruption in global supply chains, according to Pi.
Equity markets tend to perform well in periods of synchronised economic and earnings growth, which is unlikely in the current environment, the brokerage said in a research note.
As countries seek to diversify away from US-centric trade dependencies, there are potential dumping risks, especially from China, which could pressure domestic players in countries such as Thailand, noted Pi.
"The Thai economy, even in a neutral scenario without direct US tariffs, is expected to grow only 2-3% annually. In a worst-case scenario where Thai exports face US tariff hikes, both the economy and the equity market would be at greater risk," said the brokerage.
Pi recommends a cautious stance, increasing cash holdings as a buffer. A more favourable entry point may emerge if the SET index declines towards 1,150 points or lower, offering attractive opportunities for medium-term positions.
The focus should be on industry leaders such as healthcare, retail, property and banking stocks, the brokerage noted.
Pi assesses the gold outlook as more neutral in the short term, noting the worst of trade tensions between the US and its global counterparts appears to have passed, which reduces the urgency for investors to seek traditional safe havens. Gold prices previously surged on concerns over tariffs and geopolitical uncertainties.
"Now that trade talks are underway and tensions are easing, combined with expectations that the Federal Reserve is unlikely to cut interest rates aggressively due to lingering inflation concerns, the bullish momentum for gold may cool," noted the brokerage.
As a result, Pi recommends scaling back gold exposure in portfolios during this phase.
Asia Plus Securities (ASPS) said China has stepped up efforts to lift its economy through monetary easing. The People's Bank of China (PBOC) announced a cut of 0.50 percentage points to the reserve requirement ratio for commercial banks, which is expected to inject roughly 1 trillion yuan into the financial system.
In addition, the PBOC lowered the seven-day reverse repurchase rate by 10 basis points to 1.4% from 1.5%.
These measures aim to improve liquidity and support economic growth amid ongoing trade tensions between China and the US.
The PBOC also unveiled plans to expand credit via its relending programme, with 800 billion yuan allocated for innovation and technology development, 500 billion yuan for consumer services and elderly care, and 300 billion for agriculture and small businesses.
ASPS believes these stimulus efforts could help China post stronger GDP growth compared with its peers, with many analysts forecasting expansion of 4-4.5% this year.
The brokerage expects improving sentiment for China's economy to revive investor interest, benefiting sectors such as industrial estates, construction, and data centre service providers.
Power producers should also benefit from rising electricity demand, while telecom operators are poised to gain from increasing data usage in Thailand, noted ASPS.