Higher interest rates in US will not impact domestic stock market, say analysts

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BANGKOK, 12 September 2015 – Financial analysts believe Thailand’s stock market will be unscathed from the upcoming decision of the Fed to raise interest rates.

Following the possibility of a Fed rate increase by the U.S. Federal Reserve, there have been a lot of comments as to how this will affect the stock market in Thailand.

Prinn Panitchpakdi, managing director of CLSA Securities (Thailand), believes investors in the Stock Exchange of Thailand (SET) will be worried about external risk factors. In the short term, Thailand could see capital outflows, but long-term investors are still very much confident in the Thai economy, thanks to strong fundamentals and the government’s economic measures.

Peerapong Jirasevijinda, who is the managing director of Fund Management Group and Fund Manager at BBL Asset Management Company Limited, said he expects the Federal Reserve to raise interest rates by 0.25% next week while expressing that it will only have a minor impact on the SET market.

Sukit Udomsirikul, who serves as Head of Retail Research, Thailand and Managing Director at Maybank Kim Eng Holdings Limited, said regardless of the Fed’s decision, the Thai stock market will and has performed better, with the key contributor being the government’s economic policy which aims to regain investors’ confidence.

In reference to the depreciation of Thai baht, he said Thai exports as well as construction businesses have been benefiting from the weakening of the Thai currency.