Increased threat from the prospect of declining liquidity is predicted to result in volatility in capital and cash markets, as rising inflation and bond yields in the USA signaled that the nation could also be contemplating cut back its quantitative easing (QE), says Sukit Udomsirikul, chief analysis officer at SCB Securities (SCBS).
Thailand’s third wave could immediate analysts to revise their financial development forecasts for 2021, Sukit mentioned.
The outlook for the Thai financial system and the inventory market stays bleak for the second and third quarters, because the reemergence of the virus hampers the restoration in most sectors.
The implementation of QE has elevated liquidity out there, inflicting asset costs to rise over the previous 12 months, even in the course of the Covid-19 disaster.
Nonetheless, because the financial system reveals indicators of restoration, specifically will increase within the inflation price and bond yields, the US authorities could resolve to chop QE, resulting in decrease costs resulting from decrease liquidity. .
Traders have excessive expectations of financial stimulus and vaccine rollouts to speed up the financial restoration as fairness hypothesis is rife, he mentioned.
If the financial system recovers, the federal government will cut back the usage of stimulus in financial and financial insurance policies, whereas inflation and bond yields are anticipated to start out rising from the second quarter, Sukit mentioned.
All of those elements have the potential to extend volatility in monetary markets, he mentioned.
Mr Sukit mentioned the third outbreak may immediate analysts to revise their forecast for financial development for 2021, which at the moment stands between 2.7% and three%.
Nonetheless, he nonetheless believes that home consumption and exports will proceed to develop due to the stimulus measures and the worldwide financial restoration, even when the tourism sector is predicted to get better extra slowly than anticipated.
The most recent outbreak may have an even bigger affect on the financial system than earlier cycles, particularly on eating places, floor transportation corporations resembling electrical trains, tourism and retail, Sukit mentioned.
SCBS estimates that tourism operators and floor transport corporations will proceed to endure losses within the first half of this 12 months because of the lower in passenger quantity.
In the meantime, returns on the Thai inventory market this 12 months are anticipated to be in step with the earnings of listed corporations, the brokerage mentioned.
Earnings per share of listed corporations will improve by 46% and 21% respectively in 2021 and 2022, SCBS mentioned.
The brokerage recommends investing in smaller shares with increased development potential reasonably than massive shares in the course of the pandemic.
Its funding technique for the second and third quarters is to give attention to blue chip shares.
SCBS expects the pandemic state of affairs to enhance by the fourth quarter after the mass vaccinations, recommending buyers to steadily alter their portfolios with a give attention to shares with excessive development potential and capability. competitiveness.
One other suggestion pertains to shares that would profit from the nation’s reopening, Sukit mentioned.