Trade tensions have been a dominant force in the global stock markets over the past three weeks, with the US President’s announcement of higher-than-expected reciprocal tariffs against dozens of countries sparking concerns among investors. Since then, trade tensions have eased somewhat, with US President Donald Trump announcing a 90-day tariff pause, except for China, which retaliated with higher tariffs. This pause has been welcomed by many investors, as it reduces the likelihood of further trade disruptions. However, the market has continued to experience volatility, with the Stock Exchange of Thailand (SET) swinging between 1,050 and 1,150 points during this period. Volatile movements have been observed in most blue chips, but some safe havens, such as banks and information and communication technology (ICT) stocks, have performed relatively well. In the past week, the market has reacted with more moderate movements, albeit with some negative news flows. This has led to a decrease in market volatility, although it is still expected to remain relatively high. Looking ahead, we expect the market to continue in an alternating risk-on/risk-off mode in the coming week. However, we expect this volatility to be less pronounced than in early April. The main factors influencing sentiment are expected to shift from trade war concerns to the results of the Thai banking sector and earnings previews of major real sector companies. Trade war issues are likely to focus on negotiations and discussions of non-tariff measures between the US and regional peers, including Vietnam, South Korea, and Malaysia. Investors will be closely watching these developments for comparisons and impact assessments. Thailand’s team is scheduled to hold talks with US counterparts in Washington on Wednesday, which will provide further insights into the country’s trade negotiations. In terms of short-term trading strategies, two key themes emerge:
* **Solid Earnings Visibility**: Stocks with solid earnings visibility are likely to benefit from the market’s risk-on/risk-off mode. These stocks have a clear path to profitability and can withstand market fluctuations. * **Non-Tariff Barriers**: Stocks that can benefit from changes to non-tariff barriers are also expected to perform well. These stocks can take advantage of policy changes that reduce trade barriers. For medium-term investments, we recommend:
* **Speculation on GDP-supportive Policies**: Investors should look for speculation on policies that support economic growth, such as rapid public investment and expenditure. This can benefit contractors and infrastructure players with healthy cash on hand. * **Thai Interest Rate Cut**: A possible interest rate cut by the Monetary Policy Committee on April 30 is also expected to be a positive development for the market. In the long term, we see dollar-cost averaging accumulation opportunities in the market, particularly in domestic and defensive plays such as consumer staples, healthcare, power, and ICT shares. Several factors support these views:
* **Short-term Relief**: The market has previously priced in the worst-case scenario for tariffs, providing short-term relief for investors. * **Thailand’s Trade Negotiations**: Thailand’s pursuit of a win-win result from trade negotiations with the US is expected to be a positive development for the market. * **Cheap Valuations**: Thai stocks are currently trading at low price-to-book values, making them attractive for investors seeking value. However, key risks remain, including the ongoing trade war and potential slower global economic growth. This can affect foreign exchange and bond yields, which can impact investment strategy direction. On the domestic front, aggregate first-quarter earnings of listed firms are expected to contract by 13% year-on-year, although they will be up 16% quarter-on-quarter due to the energy and petrochemical sector’s performance. Blue chips are exposed to downside risk from earnings cuts, and market participants should exercise caution when investing. In conclusion, the global stock markets are expected to continue experiencing turbulence in the coming weeks due to trade war uncertainty. However, investors can take advantage of opportunities in the market by focusing on solid earnings visibility, non-tariff barriers, speculation on GDP-supportive policies, and dollar-cost averaging accumulation. By doing so, investors can navigate the market’s risk-on/risk-off mode and capitalize on the potential benefits of these trends.