SET index rallies on trade talks, expected rate decrease

SET index rallies on trade talks, expected rate decrease

The SET index gained 1.87% on Monday, the highest gauge among Asia-Pacific bourses. (Bangkok Post photo)
The SET index gained 1.87% on Monday, the highest gauge among Asia-Pacific bourses. (Bangkok Post photo)

The Stock Exchange of Thailand (SET) index gained the most among Asia-Pacific bourses on Monday as optimism over the Sino-US trade negotiation and another policy rate cut anticipated by Thailand's central bank struck a positive note with investors.

Thailand's benchmark equity index rallied by 1.87%, an increase of 29.73 points, to end the day at 1,622.25 points in turnover worth 64.5 billion baht.

The bull run was the highest gauge among Asian indices, with Hong Kong's Hang Seng index and South Korea's Kospi index coming in at 1.65% and 1.43%, respectively.

Besides improved US non-farm payrolls data, progress in talks to resolve the protracted trade dispute between China and the US has ushered in a moment of relief for market participants, said Somchai Amornthum, executive vice-president of strategic asset allocation and fund marketing at Krungthai Asset Management.

An upcoming IPO debut by Saudi Arabia's state-run oil giant Aramco on Saudi stock exchange Tadawul has also pushed up oil prices recently as the move induces higher valuation for Aramco shares, said Mr Somchai.

"External factors have supported a rally in the SET index," he said.

The SET index hovered below 1,600 points for the majority of last week as confidence was rattled by the US Trade Representative's decision to suspend trade benefits from the Generalized System of Preferences for Thailand, effective in late April 2020. A banking equity sell-off also occurred based on anticipated lower earnings in the future.

Domestic factors played a role in the return of confidence, said Therdsak Taweethiratham, head of research at Asia Plus Securities.

On Monday's SET index rally was supported by an expectation the Bank of Thailand's Monetary Policy Committee will make another rate cut at tomorrow's meeting, supporting economic growth impetus, said Mr Therdsak.

An upward revision in Thailand's sovereign credit rating, expected before year-end, by Moody's also contributed to the benchmark's bull run, he said.

"Domestic factors helped usher the stock market rally on Monday, while external factors moved in line as expected," said Mr Therdsak.

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