Bangkok: Thai stocks continued their upward trend this morning, driven by several factors, particularly fund inflows and the IMF’s upward revision of its global and Thai economic forecasts following US tariffs. The overall outlook is lower than initially announced.
According to Thai News Agency, Mr. Korapat Vorachet, Senior Executive Vice President of Krungsri Securities, stated that the market atmosphere continues to be supported by continued foreign fund inflows, amid a larger picture reflecting a capital shift away from Developed Markets to Emerging Markets, particularly in Asia. A key factor to watch is the US Federal Reserve meeting, which the market is adjusting to a more accommodative outlook. Although interest rates are expected to remain at 4.25-4.5%, the Fed’s stance on inflation risks from new US import tariffs will be crucial. If the Fed remains cautious, US stock markets could be interpreted as lacking monetary policy momentum, while Emerging Markets are gaining an advantage with their more accommodative policies.
Positive factors also came from the International Monetary Fund raising its 2025 global GDP forecast, though the US’s increase was only +0.1%, the lowest among major economies. The IMF’s World Economic Outlook, released in July, revised the global GDP up to 3% from the previous 2.8%. This revision was primarily due to a lower US tax rate than the one announced in April, with the IMF basing its tax rate assumptions on the July rates. Key countries with upward revisions include the US, China, Europe, and Japan, while Thailand’s GDP was revised upwards to 2% from 1.8%. This reflects that Emerging Markets, particularly in Asia, are becoming a new magnet for fund flows.
The dollar also strengthened, but Emerging Market currencies remained stable, reflecting capital inflows and confidence in the regional economy. Crude oil prices surged for two consecutive days, with average oil prices rising 3.6% on news that US President Donald Trump pressured Russia to cease its attack on Ukraine or face export sanctions. This boosted energy prices and stocks, alongside a rise in foreign tourists, particularly in China, which saw a seven-week recovery. This bolstered service-related and reopening stocks, including the AI semiconductor sector, with signs of an upward revision to the AI tech target.
The International Monetary Fund announced that it had slightly raised its global economic growth forecasts for 2025 and 2026, citing larger-than-expected forward orders ahead of the August 1 US tariff hike and a projected lower effective US tariff rate from 24.4% to 17.3%. However, it warned that the global economy still faces major risks, including further tariff hikes, geopolitical tensions, and rising budget deficits in many countries, which could lead to higher interest rates and tighter global financial conditions.