Thai firms cheer rejection of Trump

Business executives and stock market analysts shared a positive view of the US midterm election outcome, saying a Democrat sweep provides a potential opportunity for stronger checks and balances on the Trump administration's policies, paving the way for capital to flow into the Thai market.

Ongart Kittikhunchai, president of the Thai Food Processors' Association, said while US President Donald Trump retains executive authority to introduce new policies, the election results could restore checks and balances within the US power structure.

Mr Ongart said the Thai government should prepare new lobbyist teams to manage trade negotiations through both direct and informal channels.

"We hope the Middle East conflicts will end or at least de-escalate. Such a resolution would benefit the global economy and support Thai agricultural exports," he told the Bangkok Post.

Association members export a variety of products to the US, including tuna and canned pineapple, and the demand for processed food has increased following the Russia-Ukraine war and the Middle East conflicts.

However, war-related increases in energy, packaging, logistics and fertiliser costs are putting pressure on businesses.

While the baht has weakened against the US dollar, it has not returned to its previous level and US tariffs remain a major obstacle for exporters, said Mr Ongart.

Krungsri Securities (KSS) shared a similar view, saying a Democratic victory in the midterms would constrain Trump's ability to implement his economic policies.

However, the greater potential impact is on a conflict-driven surge in crude oil prices, which could fuel inflation, push up interest rates and weaken overall demand, potentially undermining the attractiveness of financial assets, noted the brokerage.

A Democrat-controlled Congress could reduce uncertainty surrounding the Trump administration's policies, particularly those related to military conflicts and trade measures, noted KSS, which should benefit emerging markets, especially as global equities have already experienced sell-offs in anticipation of these risks.

BLUE WAVE

Paradorn Tiaranapramote, head of research at Asia Plus Securities (ASPS), said a Democratic sweep could trigger tighter regulatory scrutiny of major US industries, particularly technology, artificial intelligence, energy and financial services, while prompting capital to rotate into other sectors and overseas markets.

A Democrat-controlled Congress could make it more difficult for the Trump administration to pass legislation, while increasing congressional scrutiny of businesses, particularly technology companies, he said.

This shift could weigh on valuations as investors reassess the regulatory outlook and move funds towards sectors facing less political pressure.

Mr Paradorn said recent market movements suggest investors are rotating out of technology and energy stocks rather than withdrawing from equities altogether.

Over the past week, technology and energy were the only two sectors in the S&P 500 to record declines. Together, they account for roughly half of the index's market capitalisation.

The other eight sectors posted gains, indicating that investment funds were shifting towards other industries rather than leaving the stock market entirely, he noted.

The rotation could benefit emerging markets, including Thailand, as some capital moves away from US tech stocks, said Mr Paradorn.

Although Thailand has a relatively small technology sector, local tech stocks could remain volatile in response to movements in their US counterparts.

However, Thai equities could attract some of the redirected investment flows, while hospital stocks may benefit from a shift towards sectors perceived to be less exposed to regulatory risks under a Democratic Congress, noted ASPS.

Mr Paradorn expects US market selling pressure to gradually ease, potentially providing an opportunity for Thai stocks to benefit from the changing global investment landscape.