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Baht/$ 33.68/71
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GOLD |
14,700
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Noppadon resignation leads to temporary dip
DARANA CHUDASRI & NUNTAWUN POLKUAMDEE
Thai stocks ended up a modest 0.1% yesterday in highly volatile trade dominated by investor concerns about the growing political tensions in the country. The Stock Exchange of Thailand index closed at 721.86 points, up 0.73, in trade worth 13.3 billion baht.
The index had dropped to as low as 713.19 points in the afternoon after Foreign Minister Noppadon Pattama announced his resignation from the cabinet over the uproar over the Preah Vihear temple dispute. But shares rebounded to as high as 727.47 just before the close, before losing nearly all of the day's gains in the run-off session.
Analysts said the market was largely directionless as investors considered the future survival of the government.
Finance Minister Surapong Suebwonglee, also the secretary-general of the People Power Party, ruled out a dissolution of Parliament or resignation by Prime Minister Samak Sundaravej.
But Dr Surapong said a cabinet reshuffle was imminent, given the vacancies in the foreign affairs and public health portfolios.
Public Health Minister Chaiya Sasomsab was forced out this week after the Constitutional Court found that he had violated asset declaration rules.
Analysts said the market was expected to remain volatile, even as second quarter earnings results are expected to be broadly positive.
''There are no real positive factors driving the market,'' said Kavee Chukitkasem, head of research at Kasikorn Securities.
He said yesterday's gains were likely spurred by a technical rebound and bargain hunting, adding that most regional markets had also traded higher. The SET index has fallen nearly 13% over the past three months and 16% for the year to date, largely due to political tensions, rising inflation and slowing economic growth.
In the currency markets, the baht fell marginally against the US dollar to 33.68/71, from 33.62/66 on Wednesday.
Thiti Tantikulanan, head of capital markets for Kasikornbank, said the baht and other regional currencies had been benefiting as a result of heavy dollar selling by the Korean central bank.
He said the baht was unlikely to move significantly over the next several days, likely remaining rangebound at 33.55 to 33.85 next week.
In the bond market, yields rose by around 20 basis points for five-, seven-and 10-year bonds, with the five-year bond quoted at 5.48178%. Yields for shorter terms remained unchanged.
Ariya Tiranaprakit, a senior vice-president of Thai Bond Market Association, said foreign investors had been net sellers of 500 million baht worth of debt since the beginning of the month, but still had a net buy position of 50 billion for the year to date.
''Trading volume yesterday was quite thin. There was no real fund flows from the equity to the bond market,'' she said.
Bond yields, which have risen sharply over the past several months with inflation, have fallen over the past two weeks over concerns that the government may restrain new issue supplies.
Investors are also scaling back their expectations for an interest rate increase by the central bank's Monetary Policy Committee to 0.25 percentage points from previous estimates of a 0.5-point hike.
The one-day repurchase rate currently stands at 3.25%, but is widely expected to be raised at the next MPC meeting on July 16 as inflation continues to rise.
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