Thai stocks are likely to fall next week amid growing worries over a slump in export growth as the baht continues to hit new nine-year highs against the dollar, analysts said Friday.
Investors will also trade with caution ahead of the US Federal Reserve's two-day policy meeting, which ends on Wednesday, they said. "Sentiment is going to be negative as investors are worried over weak export growth due to the baht's appreciation against the dollar," said Kanang Duangmanee, a senior economist at Kasikorn Research Centre.
The Thai baht hit its new nine-year highs against the dollar over the past week due to ongoing speculation that the Bank of Thailand would soon end controversial capital controls aimed at taming the rising local unit.
Despite repeated official comments saying the government would keep the currency controls, investors were betting the opposite, pushing the Thai baht to new highs against the greenback. The Thai baht on Friday closed at 34.92-93 to the dollar, up from 35.22-24 a week earlier.
Kanang said the rising baht would pressure the market, especially export-linked stocks, as it makes Thai exporters less competitive in overseas markets and cuts the value of firms' repatriated profits.
Exports are the key driver of the Thai economy, which is expected to slow down this year mainly due to sluggish shipment growth. For the week to March 16, the Stock Exchange of Thailand composite index slipped just 0.12 points to close at 671.05 on Friday.