Trump victory prompts Thai stock market strategy reevaluation

Donald Trump’s victory in the US presidential election, coupled with a comprehensive Republican majority in Congress, has prompted a reevaluation of investment strategies in the Thai stock market.

Natchat Mekmasin, assistant managing director of securities analysis at Trinity Securities, suggests that the Thai stock market is likely to align with the broader trend observed in emerging markets. However, he points out that the Thai index may demonstrate greater resilience compared to its emerging market counterparts.

This is attributed to the fact that domestic government bond yields have not increased this round, which continues to make the valuation of Thai stocks appear attractive to local investors.

Furthermore, institutional investors in Thailand retain liquidity, partly due to government initiatives aimed at stimulating the capital market, such as the Vayupak 1 Fund and the Thai ESG Fund. Consequently, the Thai stock index is expected to remain stable through the end of the year.

The sectors poised to benefit from the US election outcome include the oil and energy sectors, due to Trump’s pro-fossil fuel policies, and industrial estates, amid expectations of manufacturing shifts resulting from trade war concerns.

In addition to these, safer investment options remain in domestic consumption-related stocks, spanning retail, real estate, communications, finance, and tourism sectors. Various mutual funds also continue to offer substantial dividend yields, presenting appealing investment opportunities, said Natchat.

“Trump’s victory, reminiscent of 2016, is anticipated to influence global asset variables such as increased government spending and potential hikes in import taxes. This could lead to intensified global price pressures, especially on taxed goods, potentially driving global inflation upwards.”

US dollar

The strengthening of the US dollar is another trend expected to persist. Simultaneously, there is an evaluation of gold prices, which may stabilise sideways in the near term. Although gold is traditionally seen as an inflation hedge, its attractiveness might wane as the US Federal Reserve’s interest rate cuts are anticipated to be delayed.

These developments have investors closely monitoring the implications of Trump’s policies on the global economy. The potential for increased government expenditure under the new administration could stimulate economic activity, yet also lead to higher import duties, adding to inflationary pressures worldwide. Such dynamics are likely to influence investor sentiment and strategies across various markets.

The Thai stock market appears well-positioned to leverage these global shifts, with certain sectors standing out as particularly promising. Energy and industrial estates are set to benefit from US policy directions, while the steadiness of domestic consumption stocks provides a buffer against potential volatility, reported KhaoSod.