SET bounces back on Trump-Xi pact

The Stock Exchange of Thailand (SET) index rallied yesterday as stock markets across the globe saw a boost in investment appetite following lower tensions over the tit-for-tat tariffs between China and the US.

A White House statement on the weekend said “[US] President [Donald] Trump has agreed that on Jan 1, 2019, he will leave the tariffs on US$200 billion worth of products at 10%, and not raise it to 25% at this time.”

The truce also saw a promise by China to reduce the trade imbalance between the two countries by agreeing to purchase US farm crops, and energy and industrial products.

Investor confidence was lifted as a result of the ceasefire in the bilateral trade row, with the SET index rising sharply by 30.81 points to close at 1,672.61 points, in turnover worth 60.6 billion baht.

Large-cap stocks dominated the stock market rally, with PTTEP shares rising by 6.44%, followed by PTT (+5.08%) and CPALL (+4.76%).

Institutional investors were net buyers of 9.5 billion baht, with foreign investors and brokerages purchasing 2.7 billion and 143.6 million worth of shares, respectively. Retail investors were net sellers of 12.3 billion baht.

Paiboon Nalinthrangkurn, chairman of the Federation of Thai Capital Market Organizations (Fetco), said confidence is buoyed globally because leaders of the world’s two largest economies have agreed to withhold imposing additional import duties for 90 days.

Despite prevailing uncertainty over trade negotiations between China and the US during the next 90 days, the latest agreement has overturned pessimism for the last month of 2018, said Mr Paiboon.

It is expected that foreign and domestic investors will return to purchase stocks with good fundamental support in their investment portfolios, he said.

Mr Paiboon said oil output is predicted to slightly decrease next year, causing a rise in oil prices, contributing to a positive gain for the energy sector.

External factors, such as the Sino-US trade row and global monetary policy tightening, are not anticipated to spook investment sentiment in the Thai stock market next year compared with this year, but domestic political developments could sway investors, he said.

If an elected political party does not have enough votes to form a government, this could cause a delay in government formation, resulting in management instability and hiccups in economic development progress, said Mr Paiboon.

A stable government will be the most watched factor after the general election ends, he said.

The SET index could reach 1,850 points next year if the elected administration continues public investment projects and there are lower external uncertainties, said Mr Paiboon.

Fetco’s investor confidence index (ICI) for the next three months declined for the second consecutive month to 97.89, a decline of 13.9%, but remains in neutral territory.

A figure below 80 points is considered bearish, 80-120 is neutral and over 120 is bullish.

The ICI survey was conducted before the Trump-Xi meeting in Buenos Aires.

Ebbing investor confidence is attributed to fallout from the Sino-US trade row, which has taken a toll on Chinese, Japanese and Thai exports, said Fetco.

Investors are also keeping a wary eye on the continued gradual increase in US interest rates and global monetary policy tightening, which have caused a spike in bond yields, said Mr Paiboon.

External factors are not anticipated to spook investment sentiment in the SET next year. PAIBOON NALINTHRANGKURN Chairman, Fetco