Thai stocks up on Japan's massive stimulus package

Thai stocks up on Japan's massive stimulus package

Thai shares yesterday joined in Asian stock market gains after Japan's Prime Minister Shinzo Abe unveiled a stimulus package of more than ¥28 trillion (9 trillion baht), exceeding initial estimates of ¥20tn.

The Stock Exchange of Thailand (SET) index jumped at the opening bell, betting that the Bank of Japan (BoJ) would ease its monetary policy at tomorrow's meeting. Mr Abe's larger-than-expected stimulus, announced in a late morning session, helped the main gauge to remain in positive territory for the entire day before closing at 1,515.40 points -- a 0.7% rise. Turnover was heavy at 59.9 billion baht.

Foreign investors yesterday bought 3.19 billion baht more than they sold yesterday, while institutional investors, retail investors and brokers yanked out 153.34 million, 2.63 billion and 412.39 million, respectively.

The benchmark Nikkei 225 index finished up 1.72%, Hong Kong's Hang Seng index rose 0.4%, the Jakarta Composite Index finished 1% higher -- its highest close in more than 14 months -- while shares in the Philippines added 1%.

Chinese stocks, however, had their worst day in six weeks on worries about new regulatory restrictions for the nation's $3.5 trillion market for wealth-management products. The Shanghai Composite Index dipped 1.9%.

Thanomsak Saharatchai, research head at KT Zmico Securities, said whether the SET index can move up further would depend on the outcome of the meeting between the BoJ and the US Federal Reserve.

Chaiyot Jiwangkul, an analyst at Globlex Securities, said the persistent capital inflows would continue to lift the Thai stock market today.

The earnings season for listed companies and Thailand's constitutional referendum on Aug 7 also warrant monitoring, he said.

Meanwhile, Kasikorn Research Center (K-Research) maintained its forecast for the Thai economy at 3% this year, but said that the pace of growth could be higher if budget disbursement for public expenditure meets the government's target.

K-Research managing director Charl Kengchon said such a growth forecast is mainly driven by public investment, which would help Thailand's GDP to expand by 3.2% in the first half and 2.9% in the second half.

The Thai economy has shown signs of recovery, but the government's budget disbursement would be a crucial factor in determining this year's economic growth outlook, he said.

"We have to keep a close watch on whether investment coming from the public budget disbursement, which is set at 11%, will meet the target," said Mr Charl.

"If the target is met, this would have a [positive] impact on this year's GDP growth and an upward revision of economic growth could occur in September."

The outcome of the coming public referendum on the draft charter is not expected to affect Thailand's economic growth this year as the government still has mechanisms to expedite public investment, while the private sector and investors continue to commit to long-term investment based on the country's economic fundamentals rather than the referendum issue, he said.

The general election is expected to be held by 2018 in accordance with the current administration's election roadmap, he added.

K-Research forecasts public and private investment in 2016 to expand by 11.5% and 2.3%, respectively.

GDP growth hit a three-year high of 3.2% year-on-year in the first quarter, up from 2.8% in the final quarter of 2015. The growth is mainly attributed to the government stimulus measures and rapid improvement in the tourism sector.

Annual exports, however, are forecast to decline by 2%, said Mr Charl, noting that shipments in the second half could record a greater drop than the first half due to how Brexit has caused slower trade across Britain and the EU.

Delays in Brexit negotiations between Britain and the EU could further affect annual Thai exports this year, he said.

The Bank of Thailand's Monetary Policy Committee is expected to stand pat on its 1.5% policy interest rate until late next year, while the US Federal Reserve could make a one-time interest rate normalisation near the end of this year, given the improved economic conditions in the US, said Mr Charl.

K-Research projects Thailand's GDP growth at 3.3% next year, with exports expanding by 0.8%.

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