Bangkok: The Thai capital market is reeling from the ongoing war in the Middle East, leading to heightened volatility in capital flows, as outlined by Dr. Kongkiat Opaswongkarn, Chairman of the Executive Board of Asia Plus Group Holdings Public Company Limited. Dr. Kongkiat has advised investors to prepare for the uncertainties that lie ahead.
According to Thai News Agency, the escalating tensions have turned geopolitical factors into a critical variable influencing capital market directions in the short term. This is occurring at a time when investors worldwide are exhibiting risk-averse behavior. Dr. Kongkiat noted that in times of uncertainty, capital tends to shift towards safe haven assets, while stock markets, especially in emerging economies, face increased selling pressure.
One prominent aspect of the current situation is the rapid and volatile movement of capital. Foreign investors are adjusting their portfolios to mitigate risk, showing a tendency to move funds into safer assets like government bonds or holdings in major economies. Consequently, emerging market stock markets, including Thailand's, may experience short-term pressure from capital outflows.
Rising energy prices, driven by the conflict, are also exerting pressure on the economy and corporate profits. Companies with high energy costs, particularly in industrial, manufacturing, and transportation sectors, are directly impacted. Dr. Kongkiat noted that when listed companies face profit pressures, it inevitably affects the overall attractiveness of the stock market.
Despite these challenges, Dr. Kongkiat believes there are still opportunities for discerning investors. Stocks in sectors benefiting from energy prices or those capable of passing on costs to consumers may present viable options. He emphasized that investing in this period requires greater selectiveness and that traditional strategies focused on overall market growth may no longer be applicable.
In times of high uncertainty, risk management is crucial. Dr. Kongkiat advises investors to diversify their investments and avoid holding excessively high-risk assets. Additionally, he emphasized the importance of closely monitoring global circumstances, as geopolitical factors can change rapidly and impact market directions immediately.