Thailand: SET falls sharply as capital exits amid looming political uncertainty

BANGKOK (The Nation/ANN) - A group of political activists announced yesterday to go ahead with a planned 'Run Against Dictatorship' campaign, starting on January 12 next year.

The Stock Exchange of Thailand Index fell 1.54 per cent or 24.17 points to close at 1,549.74 on Monday (December 16).

“Investors might be concerned about the looming political uncertainty,” said Pipat Luengnaruemitchai, assistant managing director at Phatra Securities.A group of political activists announced yesterday to go ahead with a planned 'Run Against Dictatorship' campaign, starting on January 12 next year.

They were forced to hold the press conference at Thammasat University after police ordered owners of two venues, Foreign Correspondents’ Club of Thailand and the Royal Rattanakosin Hotel, to cancel bookings for the event.Their political activity coincided with a move by popular opposition figure Thanathorn Juangroongruangkit, leader of Future Forward Party who has been disqualified as a member of parliament by the Constitutional Court. Thanathorn and his supporters held a brief protest on Saturday and vowed to continue their protest against what they described as double standard practice by law enforcement agencies, the Thai court and the Election Commission.

Many who had joined Saturday rally posted on their social media platforms that they did not like Thanathorn but could not tolerate the double standard practice of government institutions, signalling that many more may participate in political protests next year.“Looking ahead, investors may be worried about a possible return to political chaos” said Pipat.Another factor is the economic situation with growth showing signs of continuous deceleration.

The current slowdown has started to affect profits of listed companies, the manufacturing sector and employment, he said. The phase one deal reached between the US and China is just a temporary truce of the trade war, he added. Investors should monitor how the world’s two largest economies will negotiate in the phase two deal, he said, in referring to the trade deal under which the US will reduce tariffs but keeping the 25 per cent import duty on Chinese products worth US$ 250 billion that started last year.

Some good news is that the trade war is not escalating for now, Pipat said.Before the market opened on Monday, Tisco Market Insight raised the issue of domestic political factor as key focus as well as the meeting of Bank of Thailand’s monetary policy committee on interest rate on December 18 and Bank of Japan meeting on December 19.Foreign investors made net sales worth Bt4.8 billion on Monday, compared to Bt20.8 billion between December 1 to 16, and total next sales of Bt41.3 billon year-to-date.Meanwhile, Ariya Tiranaprakit, senior executive vice president of Thai Bond Market Association said:" the bond market is quiet as many investors have left ahead of the year-end holidays.

Moreover, the US-China trade deal has made the bond market less attractive than the equity market or gold as investors want to buy more risk assets".Year-to-date, foreign investors have sold Thai bonds worth almost Bt70 billion, largely caused by the central bank cutting its key policy rate twice this year to 1.25 per cent, a very low level, she said.

The rate cuts led to drops in Thai bond yields. For example, yield of 10-year maturity bond has decreased from about 2.5 per cent to 1.6 per cent , she said.She pointed out that while investors have been leaving the bond and stock markets, value of the baht has remained strong. “This demonstrate that capital flows have nothing to do with the baht value, rather it is the high current account surplus that keeps baht strong,” she said.

According to Bank of Thailand , weighted exchange rate was Bt30.212 per dollar on Monday (December 16) compared with Bt30.346 on Monday last weekThailand is expected to continue to post a large current account surplus this year, estimated to reach US$ 30.4 billion,from $28.5 billion last year.

The Bank of Thailand earlier warned importers and exporters to brace for a two-way movement of the baht in an attempt to sway market sentiment which heavily bets on continuous appreciation of the Thai currency.


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