ASEAN KEY DESTINATIONS
Thais uneasy about rest of year
Factors to watch in the second half will be the handling of the US government-debt situation, US monetary policy, the risk of a delayed recovery in Japan, the public-debt crisis in the euro zone, a rise in bad loans in China, and the aftermath of the Thai elections.
"Some investors have slightly underweighted and some have stayed neutral on the local stock market," he said.
Phatra forecast Thai economic growth of 3.8 per cent this year, while the market consensus is about 4 percent, he added.
Supavud expressed pessimism about the global economic outlook, any slowing of which would adversely affect Thai exports.
He said that at the beginning of the year, the market was optimistic about the global economy, but it had grown concerned over the past two months about a weakening of the US economy and the public-debt crisis in Europe.
The International Monetary Fund two weeks ago slightly lowered its growth projection for the global economy to 4.3 from the 4.4 percent estimated in April, and significantly downgraded its growth forecast for the US economy to 2.5 percent from the previous 2.8 percent.
Supavud predicted that the US Federal Reserve was unlikely to continue injecting easy money into the market when its "QE2" quantitative-easing round ends this month.
He said the injection of excess liquidity had proved ineffective, since it was not encouraging US banks to lend more, contrary to what the Fed had expected.
The easy-money policy has instead encouraged investors to take high risks and resulted in rising commodities prices, not least for gold and oil, Supavud said.
The market is now also worried about the US budget deficit. The currently unfunded US government has debt obligations amounting to about US$50 trillion (nearly Bt1.55 quadrillion). Supavud said the administration needs to raise taxes and reduce welfare spending on healthcare due to its ballooning costs as a result of a rising aging population.
On the local political front, should the Pheu Thai Party win the upcoming general election and form the next government, it may find it is unable to function, as happened to the Samak Sundaravej administration in 2008, Supavud said, referring to the views of political analysts.
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