Recap: Worries over a possible debt default by Cyprus and deteriorating health of the euro zone bloc sent world stock markets into a tailspin last week. The Thai market was further soured by fears of draconian measures after the baht soared a 16-year high, and tightening of margin requirements to deter speculation in high-risk stocks.
A woman studies currency exchange rates at a bank in Bangkok on Wednesday, when the baht touched a 16-year high of 29.06 to the US dollar. THANARAK KHOONTON
The SET index moved in a wide range of 1,601.43 to 1,464.72 points and closed on Friday at 1,478.97, down 7.5% from the week before _ the worst one-week loss since October 2008 _ with average daily turnover of 77.65 billion baht. Foreign investors last week sold 6.36 billion baht more than they bought, while brokers were net sellers of 111.41 million baht. Retail investors bought 3.25 billion baht local institutions 3.22 billion.
Big movers: Tops in trading value were Natural Park (N-PARK), rising 33.33% on the week to 20 satang; CEI, up 30.1% to 5.10 baht; GJS, up 18.2% to 13 satang, YCI, up 17.69% to 8.65; and MME, up 16.4% to 3.12 baht.
Newsmakers: The baht touched a 16-year high of 29.06 to the dollar on heavy capital inflows before easing back to 29.28/31 on Friday. The Bank of Thailand and the Finance Ministry insist they plan no special measures to deal with currency appreciation, though the Finance Ministry still believes the central bank should trim its policy rate to cool demand for the baht.
- The euro weakened as the banking system in Cyprus teetered on the verge of collapse. Lawmakers over the weekend were working on a plan to tax large bank deposits, after rejecting a universal deposit levy earlier. They have until today to qualify for 10 billion euros in bailout funds from the IMF and EU.
- The Manufacturing Production Index for the euro zone showed weakness in manufacturing and services with the composite index falling to four-month lows, weakening sentiment even further.
- The yen strengthened to 94.49 to the dollar as investors sought safer assets amid the news from Cyprus. Markets are watching new Bank of Japan Governor Haruhiko Kuroda for signals about more aggressive monetary easing, but none have emerged so far.
- US economic indicators told a brighter story. Weekly jobless claims remained low and home sales were at a three-year high, in line with market expectations.
- Thai retail investors were spooked last Friday by the SET's plan to tighten curbs on speculation in high-risk stocks, possibly including an increase in collateral requirements in cash accounts to 20% from 15%.
- Kasikorn Research Center forecast the country's household debt would reach a record 30% of GDP in two years, up from 24% now.
- K-Research also forecast that every one percentage point rise of the baht against the dollar will knock between 0.1% and 0.3% off GDP.
- Companies listed on the SET and the MAI paid a combined 341.41 billion baht in dividends in 2012, down slightly from 344.84 billion a year earlier, with a dividend yield of 2.77% and a dividend payout ratio at 47%.
Coming up this week: Watch for European market reaction to events in Cyprus, where a bailout deal that includes haircuts for big bank depositors is taking shape.
- The SET and brokers tomorrow will discuss raising collateral levels in cash-balance accounts to 20% from 15% to ease volatility and deter speculation.
- Eastcoast Furnitech Plc (ECF) will debut on the MAI tomorrow.
- The Commerce Ministry is scheduled to announce February export data tomorrow or Wednesday. The Bank of Thailand will release February economic indicators on Friday.
- Other economic data due this week include final 2012 GDP figures for the US and South Korea, US consumer confidence for March, and euro zone economic confidence reports.
Stocks to watch: Asia Plus Securities recommends accumulating low-beta and high-yield stocks such as INTUCH, KK, AEONTS and VNT. Finansia Syrus Securities recommends buys for KBANK, KTB, PS, SIRI, CK, HMPRO and BIG C. Maybank Kim Eng Securities recommends buying SVOA on gains from baht strength.
Technical view: Kasikorn Securities sees support this week at 1,442 and resistance at 1,518. Asia Plus sees support at 1,450 and resistance at 1,500.
About the author
Writer: Nuntawun Polkuamdee & Parista Yuthamanop