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There's been an 'overreaction' in Thai stocks to trade war risks, says exchange executive

  • The threat of a looming trade war has brought uncertainty into the Thai market, Pakorn Peetathawatchai, the chief strategy and finance offer of the Stock Exchange of Thailand said.
  • Currently, Southeast Asian nations are Thailand's biggest export partners, followed by China, Peetathawatchai said, explaining that the country was no longer as dependent on the U.S. as it was before.

The threat of a looming trade war has brought uncertainty into the Thai stock market, an executive at the Stock Exchange of Thailand said Friday.

"At the moment, the uncertainty on the rules and regulations certainly play a very big role in the activities in the stock market," Pakorn Peetathawatchai, the chief strategy and finance offer of the Stock Exchange of Thailand said. That all explains "a lot of overreaction and maybe the estimation of the effect" of the new trade regulations, he added.

Spiking tariffs worldwide would hurt the countries and companies that rely heavily on exports, Peetathawatchai said, pointing out that the export proportion of the Thai economy is very high, ranging from 60 percent to 70 percent. He mentioned, however, that direct exports into the U.S. currently only account for about 10 percent of the country's total exports.

Thai flags are seen outside of the Stock Exchange of Thailand in Bangkok on January 8, 2018.
Lillian Suwanrumpha | Getty Images
Thai flags are seen outside of the Stock Exchange of Thailand in Bangkok on January 8, 2018.

Twenty years ago, Thai exports to the U.S., Europe and Japan each accounted for 20 percent, according to the SET executive, but "that has changed abruptly during the last 10 to 20 years," he said.

"The effect of the exporting to the U.S. becomes less important to our country than in the past. However, I would not say it is not impacted because many countries in Southeast Asia or in China also do indirect export to the U.S." he pointed out.

Indirect export refers to Thailand exporting goods to nations that then go on to export the goods to the U.S. That indirect economic effect can accumulate over time, the chief strategist said.

Currently, Southeast Asia is Thailand's biggest export market, followed by China, Peetathawatchai said.

"We export the most to ASEAN countries and secondly to China. So you could say that the relationship on trade for Thailand seems to be more dependent on regional economy, the Asia economy, than the U.S. trade we have at the moment," he said.