Stock market analysts and asset management executives are now predicting that the Thai index may drop to 1,250 points or lower in the short term due to U.S. President Donald Trump’s decision to increase tariffs on imports from Canada, Mexico, and China, raising concerns about an escalating trade war and rising inflation.
On Monday, the Stock Exchange of Thailand (SET) index fell 40 points, reaching a low of 1,275.37 at the start of trading, down from the previous Friday’s close of 1,314.50. The market experienced a slight recovery, ultimately closing at 1,290.88 points by midday, down 1.8%.
Supongvorn Mianpoka, assistant managing director and chief investment officer at Tisco Asset Management, referred to February 3 as “another Black Monday,” recalling a significant sell-off in the U.S. tech and AI sectors that had affected stock markets worldwide the week before.
“The White House announced a 25% import tariff on goods from Canada and Mexico, along with an additional 10% tariff on Chinese products, effective February 4. This indicates that the trade war has started earlier than anticipated,” said Supongvorn.
He emphasized that President Trump’s statements suggested he is targeting not only China but also other regions including Asia, the Americas, and Europe, with the intention of establishing U.S. leadership in these markets.
According to Krungsri Securities (KSS), China has already retaliated with a 10% tariff on U.S. imports and plans to file a complaint with the World Trade Organization (WTO). Canada has also implemented immediate countermeasures with equivalent tariffs on U.S. goods.
“The renewed concerns about the trade war are likely to dampen market sentiment, as they heighten inflation risks due to increased product prices and potential economic implications,” KSS stated in a research note.
Supongvorn indicated that Tisco now predicts the SET index could potentially drop to a range between 1,200 and 1,250 points during the first quarter of 2025, although the firm sees a possibility for the U.S. and China to resolve their trade disagreements.
“Trump appears to be using tariff increases as a strategy in U.S. trade negotiations, and the market is currently in a wait-and-see phase for China’s response. He is also aware that increasing import tariffs could lead to inflationary pressures in the U.S. economy,” he added.
The elevated risks of rising inflation in the U.S. have led Tisco to believe that the Federal Reserve may only reduce the federal funds rate once or twice this year, as opposed to the originally forecasted four cuts starting mid-year.
Tisco projects that by the end of this year, the SET index could reach a range of 1,500 to 1,530 points, representing a roughly 10% increase from 2024, due to the ongoing trend of global interest rate cuts.
Kongkiat Opaswongkarn, founder and CEO of Asia Plus Group Holdings, noted that the Thai stock market is currently vulnerable due to domestic confidence issues coupled with worsening external factors.
The decline was further exacerbated by heavy selling from long-term equity funds and some major Thai stocks. The shares of leading retailer CP All (CPALL) fell from 52 baht each to 49.5 baht during early trading, following reports that the founding family of Seven & i Holdings, the global owner of 7-Eleven, is seeking investment from Thailand’s Charoen Pokphand group for a management buyout of the Japanese retail giant.
“High tariff barriers will impact exports. With China possessing excess capacity, a trade war with the U.S. could result in Chinese goods shifting their focus from the U.S. market to Asian markets, which may affect our exports that still account for 60-70% of GDP,” warned Kongkiat.
Asia Plus now forecasts that the SET index will fluctuate between 1,270 and 1,520 points throughout the year.
