Fed decision won't hurt Thai bourse, say experts

Fed decision won't hurt Thai bourse, say experts

The Thai stock market is not likely to fall below the psychological 1,300-point level even in the worst-case scenario of the US Federal Reserve tapering its monthly asset purchases by more than $15 billion, say analysts.

Economists are divided on the size of the reductions.

Most expect the Fed will begin paring its US$85 billion in asset purchases each month by $10-15 billion, while others believe reductions will start at year-end.

The Stock Exchange of Thailand (SET) index edged down 0.32% to 1,439.13 points yesterday, in moderate trade worth 40.8 billion baht, as investors eagerly awaited the Fed's decision.

The main gauge moved within a range of 1,431.87 to 1,451.77 points.

"The worst-case scenario [cutting by more than $15 billion] would at least give the market a clear-cut view, and the stock market likes certainty," said Kavee Chukitkasem, Kasikorn Securities' head of research.

"Personally, I don't believe the Fed will cut the entire amount in one go. Ben Bernanke [the Fed's chairman] won't want to shock the market, as such a move could jerk financial markets globally."

He said the local bourse could rise but only by a little in the event the Fed makes the cuts within the expected range of $10-15 billion.

The main index has regained almost 180 points or 14.2% from the year's lowest close at 1,260.08 points on Aug 28.

The improved performance is credited to offshore investors realising their recent heavy sell-off was overdone since the Fed will likely start scaling back the stimulus on a small scale.

Smaller-than-expected improvement in some US economic indicators is expected to keep down the tapering.

Mr Kavee said if the Fed delays the stimulus curb until year-end, the SET index could hit 1,500 points in the short term.

Kasikorn Securities expects the SET index will hover around 1,500 to 1,550 points at year-end on if the country's economy recovers in the second half.

Chai Chirasevenupraphund, Capital Nomura Securities' head of investment research, said passage of the 2-trillion-baht borrowing bill by the House of Representatives for infrastructure megaprojects could provide a buffer in case the Fed starts paring more than expected.

The House has scheduled today and tomorrow for the borrowing bill's second and third readings, respectively.

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