Thai stock market rebounds despite US tariffs and global volatility
Global trade tensions ripple through Thai markets as investor confidence takes a holiday hit
Last month, the Stock Exchange of Thailand (SET) experienced volatility during the long holiday period. Before the Songkran festival, the SET was significantly impacted by US President Donald Trump’s tariff announcements, reaching a low of 1,056.41 points early in the month.
The tariff news affected global stock markets; however, the gold price rose to over US$3,300 (approximately 113,190 baht) per ounce. Following Songkran, the SET remained volatile but showed an upward trend, whereas the US market declined by more than 5%. Gold continued its ascent, reaching US$3,500 (approximately 120,050 baht) before a slight retreat, as it is deemed a safe investment in uncertain times.
Thai banks reported better-than-expected earnings in the first quarter, leading the SET to rise steadily and close at its monthly peak of 1,197.26 points, a 3.4% increase from the previous month. This volatility resulted in a 2.3% increase in average daily turnover, reaching 40 billion baht.
Trump’s tariffs, which were higher than anticipated, caused global shock. However, he soon announced a 90-day delay for most tariffs. A basic tariff of 10% applied to most imports, excluding China. The US imposed a 145% tariff on China, which retaliated with a 125% rate on US imports, effectively nullifying trade incentives between the two nations.
As the world observes these economic powers in negotiations, exploratory talks are scheduled for this weekend in Switzerland. Some countries are considering negotiating independently to alleviate the impact of US tariffs.
The US GDP turned negative due to increased imports before tariffs took effect. Furthermore, the West Texas Intermediate crude price dropped below US$60 (approximately 2,058 baht) per barrel due to demand concerns and Opec+’s decision to boost production to regain market share.
Weakened dollar
In this context, the dollar weakened while many Asian currencies, including the baht, strengthened to around 32.70 to the dollar. Recently, several global markets have rebounded to pre-tariff announcement levels, though uncertainties continue to affect the investment landscape.
Thailand has entered the results season, with Thai banks reporting first-quarter profits approximately 10% higher than expected.
Looking forward, numerous uncertainties, including monetary policy, persist. In late April, the Bank of Thailand announced a second rate cut of the year, reducing it by 25 basis points to 1.75%. Exports are anticipated to suffer due to tariffs, and the tourism sector appears weaker, with Chinese arrivals down 20-30% year-on-year (YOY).
With the main growth drivers struggling, the central bank may consider another rate cut in the second half of 2025, potentially lowering it to less than 1%.
Investment strategies continue to focus on stocks with solid fundamentals and domestic-oriented businesses. Bangkok Expressway and Metro (BEM), CP All (CPALL), Gulf Development (GULF), and Food Moments (FM) are highlighted picks.
BEM is expected to report a first-quarter profit of 871 million baht, an increase of 3% YOY and quarter-on-quarter. Despite setbacks from an expressway collapse and recent earthquake impacts, BEM is anticipated to show resilience and growth in the second quarter.
CPALL’s retail and wholesale units are gaining momentum, with a projected first-quarter net profit of 6.8 billion baht, up 8% YOY. Despite potential tourism-related challenges, CPALL remains attractive for Thai ESGX funds.
Following its merger with INTUCH, GULF’s balance sheet has improved, with net gearing at 0.89 times. The company’s expansion prospects, particularly in renewable energy, are promising. GULF’s increased stake in KBANK to 3.49% further supports its expansion strategies.
FM, primarily export-focused with limited US market exposure, is expected to achieve a first-quarter net profit of 185 million baht, a 52% increase YOY and 2% on the quarter. With a price/earnings ratio of 6 times and a high dividend yield, FM is a valuable investment, Bangkok Post reported.
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