The Monetary Policy Committee warned the Thai private sector to prepare for high volatility from the capital fund flows and the currency fluctuations as global markets and the US economy are affected by unclear policy from Trump.

The Stock Exchange of Thailand slipped 0.03 per cent or 0.41 point to close at 1,509.43 with turnover of Bt93.33 billion. Foreign investors were net sellers of Bt2.63 billion.
Singapore’s Straits Times Index fell 1.08 per cent to close at 2,789.88 points, while the Jakarta Composite Index closed down by 1.03 per cent to 5,414.32 points.
The Hang Seng Index dived 2.16 per cent, or 494.28 points, to end at 22,415.19. The main index of the Philippine Stock Exchange fell 2.5 per cent.
Other regional markets suffered deeper declines, including Tokyo, which nose-dived 5.4 per cent. Indian shares went into a free fall during trading before rebounding later to a net drop of 1.33 per cent.
Apple Wealth Securities said there should not be much worry about the SET, as it would take time to see which of Trump’s stated policies could actually proceed.
The brokerage added that on the contrary, if Trump’s idea of keeping US interest rates low is carried out, that should favour the Thai bourse as investments would return to risky assets like stocks.
Meanwhile, Komsorn Prakobpol, head of the Tisco Economic Strategy Unit, said Trump’s election victory could pressure emerging stock markets because of his policy against free trade.
Examples of Trump’s pledged trade policy are higher tariffs, particularly on imports from China, and reviews of the North American Free Trade Agreement and US obligations under the World Trade Organisation. Such policies are major risks to the global economy while world trade is stagnant, Komsorn said.
“Meanwhile, the US stock markets will likely outperform and safe-haven assets like gold, the Japanese yen and bonds are expected to gain short-term support from capital inflows,” he said.
Komsorn said the US dollar was expected to depreciate against the yen and the euro, but it would appreciate against the baht and other emerging-market currencies, he said.
Crude-oil prices are expected to be see positive impacts from a more aggressive position of the United States towards conflicts in the Middle East, he said.
Trump may abolish the nuclear agreement with Iran, which could result in the Tehran cutting its oil exports, and as a result the global oil supply would tighten.
Coal prices will gain from his policy to support coal usage, but this would have negative impacts on the price of natural gas.
Overall, the US economy is expected to gain in the short term from fiscal stimuli like tax reductions, Komsorn said.
Jimmy Koh, head of global markets and economics research at United Overseas Bank (UOB), said direct impacts from a Trump presidency on Thailand’s economy would likely be limited thanks to the Kingdom’s market-diversification strategy.
Not only the US, but also the European Union, Japan, China and Asean countries are among Thailand’s largest trading partners and foreign investors.
Impacts on the Indonesian economy are likely to be limited as well, even though the US is among that country’s top export markets.
Thailand and Indonesia are both outside the Trans-Pacific Partnership agreement and are likely to stay that way for at least two years, until all TPP members ratify the deal.
Nevertheless, Trump’s stated protectionist agenda will diminish international trade flows and imperil the fragile global economic recovery if implemented.
Currently, merchandise exports are a key drag on economic growth mainly because of slowdowns in the Chinese and Asian economies and structural constraints on significant export sectors.
Export-oriented firms will postpone their investments owing to low capacity utilisation. Consequently, it will be difficult to unleash a new investment cycle in Thailand and the economy will grow below its potential in the medium term, UOB says.
To support the Kingdom’s economic recovery, the Bank of Thailand will likely maintain the policy rate at a low level.
Meanwhile, volatility in financial markets will be heightened, and this will contribute to fluctuations in the baht and rupiah in the short term.

Volatility expected
Jaturong Jantarangs, secretary of the BOT’s Monetary Policy Committee, warned the Thai private sector to prepare for high volatility from the capital fund flows and the currency |fluctuations as global markets and the US economy are |affected by unclear policy from Trump.
Isara Vongkusolkit, chairman of the Board of Trade of Thailand and the Thai Chamber of Commerce, said Trump’s win had worried businesspeople as his policies seem more concerned with the domestic economy, while his international trade policy is unclear.
“Businesspeople have worries about his policies in the future and need to monitor his moves and US government policy closely from now on,” he said.
He hopes that as a businessman, Trump should not adopt an extremely isolationist policy, and expects that he will learn to operate on a “give and take” basis.
His policy to raise import tariffs should not include consumer goods or foods, of which Thailand is a major supplier to the US. Otherwise, Americans will suffer a higher cost of living, something Trump should not want to see, Isara said.
Isara also forecast that as Trump’s policy is against the TPP agreement, this should benefit Thailand, which has not yet joined the pact.
Nopporn Thepsithar, president of the Thai National Shippers Council, said the changes under Trump would not be as bad as many fear.
“America has been with [President Barack] Obama, a Democrat, for eight years, but nothing improved. The global and US economies have been getting worse. Trump’s triumph has reflected Americans’ demand to see real change,” he said.
In the short term, the exchange rate may be fluctuate, but in the long run, the global economy should improve along with better relations with Russia, he said.
Boonyarit Kalayanamit, director-general of the Commerce Ministry’s Trade Negotiations Department, said it was a good time for Thailand to continue its good relations with other countries including the US through the “strategic partnership” strategy if the TPP is aborted.
Wiboonlasana Ruamraksa, permanent secretary of the Commerce Ministry, said the Thai trade official in the United States was closely monitoring US moves. In the long run, Thailand need to adjust to diversify its markets to rely more on other countries as the US becomes more protectionist.
Komsorn expects the US stock markets to outperform other bourses, given the likely depreciation of the dollar and Trump’s tax-reduction policy.
However, such market movements are expected to be short-term, he said. In the long term, Trump’s stated policies will have to be monitored as to how much can be really implemented.