Thai stocks are expected to continue rising over the next two years, buoyed by a global liquidity surplus resulting from the monetary stimulus programmes of central banks in Japan and the euro zone, says an analyst.
Although the US Federal Reserve will start unwinding its massive balance sheet next year, the total amount of the reduction should pale in comparison with the money-pumping measures enacted by the Bank of Japan and the European Central Bank, and thus continued fund inflows to the Thai bourse will not be affected, said Tisco Securities chief executive Paiboon Nalinthrangkurn.
If the Fed decides to raise interest rates three times next year, this would affect the bond market and capital investment would shift towards the equity market due to the global economic recovery, Mr Paiboon said.
In dollar terms, Thai stocks have risen by about 20% year-to-date, making it likely that foreign investors will take profits through foreign exchange gains and cause a short-term correction in the SET index, he said.
But the Stock Exchange of Thailand (SET) is expected to rise to 1,850 points in the long run due to global liquidity surplus, Mr Paiboon said.
He said the most concerning factor for investment is whether US President Donald Trump's tax reform will be successful or not. If the tax reform is a success, it is expected that fund flows will return to the US as corporations benefit from reductions in corporate income tax.
Talis Asset Management chief investment officer Prapas Tonpibulsak said the SET has been performing strongly over the past two years, with profits registered at 600 billion baht in 2015 and 900 billion in 2016.
This year's profit is expected to climb to 990 billion baht, he said.
Mr Prapas said the economic factors are not a concern compared with geopolitical risks such tensions between the US and North Korea as the turmoil could escalate into aerial warfare.
"It is unlikely to happen, but if it happens the impact would be enormous," he said.
Meanwhile, the Investor Confidence Index (ICI) for October to December has risen into very bullish territory for the first time since the ICI began in early 2015, said Santi Kiranand, representative of the Federation of Thai Capital Market Organizations.
The ICI for October and December stands at 162.63, entering the index's very bullish range of 161-200, up 31.02% from September's 124.13.
Improvements in foreign capital and domestic economic figures -- especially in export and tourism -- have bolstered investor confidence, Mr Santi said.
