Thai stocks outperform peers after referendum

Southeast Asian stocks rose on Monday, with Thailand outperforming other markets in the region, after strong US jobs data raised the possibility of a rate hike by the Federal Reserve this year.

The Stock Exchange of Thailand main index rose to its highest since April 2015 after Thais voted in a referendum to accept a new military-backed constitution that would pave the way for an election next year.

The vote should reduce political uncertainty and encourage incoming foreign fund flows, analysts said.

The index closed 1.55% higher and posted its fourth session of gains, led by telecom services and financials.

“A win might be a vote of confidence in the junta and, at a stretch, better policy execution in Thailand,” said Carl Berrisford, an analyst at UBS CIO Wealth Management in Hong Kong. “But it’s really a reiteration of the status quo and the elections target for next year.”

The baht was the only emerging-market Asian currency to rise on Monday as the greenback strengthened after better-than-expected US jobs data.

“This settles political uncertainty but it’s too soon to tell if this is a genuine move by the junta to release power,” said Wu Mingze, a foreign-exchange trader in Singapore at INTL FCStone Inc, a Nasdaq-listed global payments-service provider.

The baht is likely to trade in a range of 34.80 to 35.30 this week, as the passage of the constitution bolsters investor confidence in Thai assets in the short term, TMB Bank Plc’s strategist Jitipol Puksamatanan wrote in a note on Monday.

“The result provides relief to investors,” says Tsutomu Soma, Tokyo-based general manager of fixed-income at SBI Securities. “Stability in Thailand is likely to remain, which should encourage inflows to continue for now.”

Asian shares rose, with MSCI's broadest index of Asia-Pacific shares outside Japan hitting its highest since Aug 11 last year, as investors' hunt for yield gathered momentum against a backdrop of a recovering US economy and ultra-easy easy global monetary policy conditions.

Singapore shares surged as much as 2% in their biggest intraday percentage rally since June 30, with financial and consumer services stocks driving the gains. They closed 1.51% higher.

DBS Group Holdings Ltd rose 1.4%, while Jardine Cycle & Carriage Ltd gained 3.4%.

The Jakarta Composite Index rose 0.71% and  the Philippine index gained 0.29%, with both markets helped by gains in financials.

Vietnam shares rose 0.33%, led by utility stocks Petrovietnam Gas Joint Stock Corporation and Pha Lai Thermal Power Joint Stock Company.