Thailand’s five-year bonds rose, driving the yield to a two-week low, and stocks rallied as overseas investors poured funds into the nation’s assets.
The military government plans new measures to stimulate tourism and will establish special economic zones along the country’s borders, junta leader Prayuth Chan-Ocha said on July 11.
The administration will also follow up on investment projects approved in the past two years, he said. Global funds have purchased a net $1.5 billion of Thai stocks and bonds so far this month, exchange data show.
“Thailand is on some investors’ radar again as the military government has shown its ability in implementing new policies to boost the economy,” said Monthol Junchaya, chief investment officer at One Asset Management Co Ltd in Bangkok, which has about $2.5 billion of assets.
“This has strengthened the outlook on Thai economic growth and corporate earnings.”
The yield on the 3.875% sovereign debt due in June 2019 dropped three basis points, or 0.03 percentage points, to 3.16% as of 4.35pm in Bangkok, according to data compiled by Bloomberg. That was the lowest level since June 27.
The SET Index of shares climbed 0.7% to close at 1,529.23, a 12th day of gains and the longest rally since August 2010.
An increase in government spending and a rebound in private consumption will drive economic growth to as much as 4% in the second half of 2014, Bank of Thailand Governor Prasarn Trairatvorakul said on July 9. Gross domestic product contracted 0.6% in the first quarter from a year earlier as political protests hurt production and tourism.
Baht steady
Foreign funds poured a net $486 million into Thai bonds on July 10, an 11th straight day of inflows, and $115 million into equities. Thai financial markets were closed on July 11 for a public holiday.
The baht rose for a fifth day, climbing 0.1% to 32.119 per dollar, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected exchange-rate moves used to price options, fell five basis points to 4.56%.
“Economic activity has shown some improvement during the second quarter,” Tim Leelahaphan, an economist at Maybank Kim Eng Securities (Thailand) Plc, wrote in a research report today. “The effects of the junta’s economic policies will be visible in the second half.”