Thailand’s capital market is set to undergo a structural transformation over 2-3 years, as global conflicts, capital flows and technological shifts redefine investment opportunities and risks, says the Federation of Thai Capital Market Organizations (Fetco).

Fetco chairman Kobsak Pootrakool said the Thai stock market’s future profile will increasingly resemble global trends, with a larger presence of technology-driven and next-generation industries, as several large corporations prepare for potential listings.

This transition comes as foreign capital rotates away from the US dollar towards emerging markets and gold, amid escalating multi-dimensional conflicts and rising geopolitical uncertainty, he said.

"US trade policy uncertainty could intensify," said Mr Kobsak, noting that even if President Donald Trump were to lose tariff-related cases before the US Supreme Court, he could still impose non-tariff barriers or sector-specific trade restrictions, keeping pressure on global trade partners.

"Tariffs may change form, but trade friction will not disappear," he said.

Mr Kobsak said the world is entering a new era of confrontation in which rivalry between the world’s top powers is intensifying. Competition between the US and China spans five fronts: trade, technology, finance, geopolitics and military power.

Historically, prolonged economic and trade conflicts between major powers have often escalated into broader confrontations, he said.

For Thailand, the spillover effects could be felt across equities, currencies, exports, supply chains, foreign direct investment and de-dollarisation trends. China’s push to divert exports into Southeast Asia, combined with capital outflows and supply chain relocation, is accelerating manufacturing shifts into the region.

Thailand is expected to attract around 2.5 trillion baht in direct investment this year, up from 1.9 trillion last year, reinforcing its role as a regional production base.

Thailand is building strengths in semiconductors, printed circuit boards, data centres, electric vehicles (EVs), and electronics, while the Board of Investment (BoI) is encouraging expansion into higher-value activities. The country is also repositioning itself as a regional food exporter, while the auto sector transitions from Japanese internal combustion engines to Chinese EV technology.

"Near-term economic growth may remain modest, but Thailand could return to 4% growth once the transition to a new economic structure gains momentum," said Mr Kobsak.

"However, competition is intensifying as new global players, rather than traditional giants, enter the market."

Currency volatility remains another major risk. Since Trump took office, the US dollar has weakened by about 15%, pushing the baht higher and driving gold prices sharply upward as investors reduce dollar exposure amid fears of financial sanctions.

"We are navigating a storm," he said.

"Investors must be realistic, manage risk carefully, and move decisively. Volatility is inevitable, but so are opportunities."

Looking ahead, Fetco expects the Thai stock market to feature more EV, electronics and data centre listings over three years, supported by closer cooperation between the BoI and the Stock Exchange of Thailand (SET).

While the recent rise of the SET index above 1,300 points reflects global liquidity flows into emerging markets, Mr Kobsak stressed the market’s true transformation is only just beginning.