The Stock Exchange of Thailand (SET) joined an Asian rally yesterday, a day after Thailand lifted its key interest rate, as investors took heart from the Federal Reserve chairman's remarks on US rate hikes and signs China is easing its Covid-19 measures.
The SET Index proved buoyant, attributed to improving economic data as the Bank of Thailand's Monetary Policy Committee raised its policy rate by 0.25%, in line with the market consensus, to 1.25%.
"The SET continued to recover, led by big-cap domestic plays and higher trading volume," Finansia Syrus Securities said in a report, adding the SET Index should trade between 1,610-1,670 points this year, supported by the economic recovery.
Stocks extended gains elsewhere in Asia after Fed boss Jerome Powell on Wednesday signalled a slowdown in the pace of interest rate hikes, amid hope that months of sharp monetary tightening around the world is finally taming inflation after posting a 40-year peak.
Hong Kong's Hang Seng Index led gains in Asia, rising 1.5% in morning trade, with tech giants including Alibaba and Tencent tracking massive increases in their US-listed stocks. Japan's Nikkei grew 0.9% as the US dollar tumbled to a three-month low against the yen, while the Shenzhen Component Index soared 1.4%.
The full effects of the Fed's belt-tightening have yet to be felt, but it "makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down," said Mr Powell.
He signalled the Fed's December meeting would likely see officials lift borrowing costs by 0.50%, following four consecutive sessions of 75-point hikes. Mr Powell said monetary policy will need to remain tight "for some time" to restore price stability, echoing comments from other Fed officials that there might not be any cuts until 2024.
The gains mirror increases on the three main Wall Street indices, with the Nasdaq leading the way, as bets on rates topping 5% were fading. The dollar suffered a sell-off following Mr Powell's remarks.
There are also signs China is edging towards a more pragmatic approach to fighting Covid, with its strict strategy of lockdowns and mass testing hammering the economy. Chinese Vice-Premier Sun Chunlan, who heads China's Covid campaign, told the National Health Commission the fight was entering a new phase as Omicron weakens and more people are vaccinated.
Local media reported following riots in Guangzhou, authorities eased restrictions, allowing close contacts of Covid cases to quarantine at home.
Rakpong Chaisuparakul, an analyst at KGI Securities, said the brokerage is positive about the SET Index in December and expects continued foreign equity inflows in 2023.