Turkey's currency crisis may create an opportunity for foreign investors to snap up Thai bonds because Thailand's low inflation supports bond investment returns, says Kasikornbank (KBank).
"Some fund managers that lack discernment may not realise that this is a good opportunity to pick up Thai asset classes that have strong fundamentals and satisfying returns," said Kobsidthi Silpachai, head of capital markets research at KBank.
Turkey's currency crisis may have an indirect effect on emerging countries that depend on US dollar funding as well as capital markets if investors presume that the depreciating lira will take a toll on all emerging countries without in-depth analysis, said Mr Kobsidthi.
A sharp depreciation in the Turkish lira ensued after the US last week imposed sanctions on Turkey over its refusal to extradite a US preacher imprisoned in the country.
Although Turkey's currency crisis may not affect Thailand directly, there may be indirect impact through China, which has close ties with Turkey's president, which could prompt the US to lash out further in the Sino-US trade row, he said.
"China contributes about one-third of Thailand's tourists and the baht has also strengthened against the yuan since the second quarter from 5 baht per yuan to 4.8 baht per yuan at present," Mr Kobsidthi said.
In general, the equity asset class may not attract foreign investors as low inflation translates to slow growth of net profit, he said.
The baht's value against the greenback will hold at 33 baht this year-end, supported by Thailand's export growth and increasing number of tourists in the final quarter, which is considered the high season for tourism, said Mr Kobsidthi, citing Kasikorn Research's (K-Research) forecast.
K-Research has also revised the assumption that the US Federal Reserve will normalise interest rate thrice this year to four times, he said.
Sidtetouch Pookayaporn, Kasikornbank's assistant head of corporate sales for the capital markets business division, said many Asian currencies began weakening in the second quarter, while the baht's value has been depreciating since April.
The Stock Exchange of Thailand index, meanwhile, continued falling for the second straight day yesterday. The bourse closed at 1,676.29 points, down by 19.06 points or -1.12%, in turnover worth 53.8 billion baht.
Foreign investors were net sellers of 1.96 billion baht, while brokerage firms and institutional investors sold 1.15 billion and 96.6 billion baht worth of shares, respectively. On the other hand, retail investors were net buyers at 3.2 billion baht.