US-China trade deal lasts only 90 days
The upbeat reaction to US-China trade talks over the weekend is lifting the Stock Exchange of Thailand (SET), but analysts warned positive sentiment could be short-lived as pending Thailand-US trade negotiations remain a key concern.
Washington announced on Sunday a 90-day reduction of tariffs on Chinese goods from 145% to 30%, while Beijing is cutting tariffs on US goods from 125% to 10%.
US Treasury Secretary Scott Bessent told the press he plans to meet with Chinese officials again in the coming weeks for talks covering a broader agenda.
“Investors are likely to have more confidence based on the trade deal, as the outcome was better than expected,” said Rakpong Chaisuparakul, senior vice-president of KGI Securities (Thailand).
Krungsri Securities (KSS) said the development is a positive signal for China’s economy, with the potential for further tariff easing in the future, while US negotiations are pending with other countries eager to elude tariffs, such as South Korea, Thailand, Indonesia and the Philippines.
This should result in positive sentiment for global stock plays, such as energy, petrochemicals and construction materials, noted KSS.
Veeravat Virochpoka, head of research at FSS International Investment Advisory Securities, said the focus is now on the delayed trade talks between Thailand and the US.
“It has been 40 days since President Donald Trump announced a 90-day halt of the US reciprocal tariffs. Investors will be more at ease once the date for Thailand-US trade negotiations is announced,” he said.
Pi Securities, however, cautioned the developments are likely to provide only a short-term sentiment boost, particularly for energy and petrochemical stocks, while Thailand’s weak economic fundamentals continue to weigh on long-term prospects.
Both US and Chinese officials described the talks as constructive and productive, with a follow-up round expected to address critical issues such as tariffs and technology goods.
This development triggered a rally in global risk assets, including Thai equities, while safe-haven assets such as gold saw a notable pullback.
Investors are monitoring key US economic data this week, such as the consumer price index. If inflation figures are lower than expected, it could fuel a short-term market rally, noted Pi.
However, in Thailand subdued tourism figures and lacklustre GDP growth continue to cast a shadow, said the brokerage.
Pi recommends investors reduce exposure despite positive trade headlines, citing weak domestic fundamentals and uncertainty over future US-Thailand trade talks.
“The rally could be short-lived, given Thailand’s fragile economic landscape and unclear prospects for direct US-Thailand trade negotiations, unlike peers such as Japan and South Korea,” the brokerage said in a research note.
While geopolitical optimism may offer temporary relief, investors are advised to remain cautious and focus on selective, fundamentally strong stocks amid persistent economic uncertainty, noted Pi.
According to KSS, foreign funds continued to flow out of the SET, with month-to-date net equity outflows of US$43.9 million, bond outflows of $548 million and a net short position of 1,103 contracts in the Thailand Futures Exchange. The baht weakened to 33.4 to the dollar.
