The Association of Securities Companies (ASCO) has issued a forewarning that the era of liquidity-driven stock market rallies may soon reach its terminus. This anticipated shift comes in light of the ongoing tapering of substantial money printing by major central banks worldwide.
Pattera Dilokrungthirapop, ASCO’s Chairwoman, shares her insight, “We’ve traversed through the quantitative easing (QE) era since 2008, an epoch characterized by a deluge of cash inflating stock markets across the globe. But as the intensity of this cash injection is gradually retreating, we’re seeing the twilight of the liquidity surplus era. It’s critical for us to recalibrate our expectations, acknowledging that offshore fund flows may not remain the key driving force of stock markets.”
The US Federal Reserve is taking the helm amongst major monetary authorities in tapering QE and elevating its policy rate. Concurrently, the money infusion by other central banks is witnessing a downward trend, observes Mrs. Pattera.
The flood of liquidity in international financial markets has driven numerous stock markets to unprecedented highs. Although the benchmark Stock Exchange of Thailand (SET) index hasn’t sunk to a new low since the financial upheaval of 2008, it has more than doubled its standing from 784.24 points in January 2008.
As the landscape evolves, it’s crucial for investors and market stakeholders to gear up for potential shifts in market dynamics. The approaching conclusion of the ‘easy money’ era could unveil a new set of challenges and opportunities in the investment sphere. As ever, a comprehensive understanding of the economic climate and informed decision-making will be crucial in successfully navigating these changes.