BANGKOK, Thailand – Asia Plus Securities warns that the recent rebound in Asian stock markets may not represent a true recovery, with investors facing continued risks from global interest rates, weaker-than-expected US growth and profit outlook revisions. The firm said Asia-Pacific markets opened strongly, led by South Korea and Japan, alongside gains in Nasdaq Futures. However, historical trading patterns at the end of July showed that markets often recovered during the day before facing late-session selling pressure, occurring in 6 out of 8 trading days.
This pattern suggests a shift from “buying the dip” toward a distribution phase, where investors may be taking profits rather than building new positions. US economic data also raised concerns, with second-quarter GDP growth coming in at 1.5%, below market expectations of 2.0%. While the Personal Consumption Expenditures (PCE) price index remained stable and eased inflation concerns, investors are closely watching upcoming manufacturing and employment data. Stronger-than-expected figures could revive worries over inflation and interest rates. The US Federal Reserve’s more hawkish stance has also pressured markets. Fed Watch expectations point to a possible rate increase later this year, pushing US 30-year Treasury yields up to 5.20% and weighing on equities.
Technology stocks could see short-term rebounds, but medium-term gains remain limited as analysts reduce price targets for major chipmakers, including South Korea’s SK Hynix and Samsung. Similar adjustments have affected Thai technology and petrochemical stocks such as DELTA and IVL.
South Korea has introduced measures to curb excessive leverage, including raising minimum collateral requirements for single-stock leveraged ETF and ETN investments and temporarily suspending new ETFs linked to Samsung and SK Hynix.
Meanwhile, the Japanese yen strengthened more than 3%, breaking below 160 yen per US dollar and reaching its strongest level since December 2023. Markets are watching for possible intervention from Japanese authorities ahead of the Bank of Japan meeting, with a more hawkish stance potentially triggering a further unwinding of yen carry trades. For Thailand, Asia Plus noted that the Bank of Thailand has shifted toward a “Dual-Tool Approach,” combining interest-rate policy with targeted measures to address structural economic issues. Thailand’s policy rate currently stands at 1.0%, among the lowest globally, aimed at supporting economic recovery. However, future rate hikes remain possible if inflation stays elevated or the baht weakens significantly.
The brokerage highlighted several Thai economic support measures expected to benefit key sectors:
- The “Close Debt Fast, Move Forward” program could help reduce non-performing loans and benefit commercial banks and asset management companies.
- The SME Credit Boost program could improve access to financing for small businesses, supporting banks, industrial estates, construction materials and retail sectors.
- The SMEs Secure+ liquidity program could strengthen business cash flow and investment opportunities.
Asia Plus recommended a defensive investment strategy following the market holiday, focusing on stocks with strong individual catalysts.
Its top picks include:
- CPALL – A lagging consumer stock expected to benefit from domestic recovery and government stimulus measures.
- DELTA – A speculative pick, with expectations that earnings may recover after passing its low point in the second quarter.
- MAJOR – A speculative pick, supported by a strong second-half movie lineup expected to bring audiences back to cinemas.
