The US Federal Reserve is likely to start tapering its US$85 billion monthly asset-purchasing scheme in the second half of next year following disappointing US economic growth for the first quarter, Brian Baker, CEO and director of Pimco Asia, said.
Cutting stimulus spending now would result in an interest rate hike in the US, which could stall the economic recovery there, he said.
The Fed has been buying large quantities of US bonds and mortgage-backed securities in an effort to keep interest rates low, to stimulate the world's largest economy.
However, the Fed's launch of a road map to end the stimulus this month has rattled asset classes worldwide. Under this plan, the Fed would start cutting back its stimulus later this year and terminate purchases by the middle of 2014 if the economy continues to improve.
Slower-than-expected US economic growth in the first quarter, 1.8% year-on-year, stoked expectations the stimulus would be maintained and lifted stock markets across Asia yesterday.
The SET index rose 1.55% on Thursday to close at 1,446.45 in trade worth 11.7 billion baht. The Philippines' stock market was the best performer in Asia with a 3.24% rise, followed by Japan's Nikkei 225 at 2.96%, Korea's Kospi surging 2.87%, and Jakarta up 2.75%.
But Mr Baker warned investors that the recent correction in bond and equity markets has not come to an end.
Pimco is one of the largest active fixed-income investment managers in the world with US$2 trillion in assets under management as of 2012.
Prapas Tonpibulsak, chief investment officer of Krungsri Asset Management, said the SET index is likely to reach 1,650 points later this year as the government's 2-trillion-baht infrastructure projects could boost investor confidence. The massive seven-year outlay in infrastructure projects is expected to kick off later this year.
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