Asian markets rejoice at Fed rate call
SET gains mirror regional performance
Thai shares rose by 0.86% yesterday on increased risk appetite after the US Federal Reserve signalled a gradual tightening with its first rate increase in nine years.
However, concerns over the expensive 900-megahertz licences capped gains.
Local bond yields rose marginally, while the baht fell against the US dollar.
The Stock Exchange of Thailand (SET) index moved back and forth in early trade yesterday before a buying spree gathered force in the afternoon session, sending the main gauge to finish at 1,310.34 points in brisk turnover worth 45.6 billion baht.
Selling pressure held back the four telecom companies vying fiercely for two licences on the 900-MHz spectrum for fear the high prices would hurt their bottom lines.
Shares of Advanced Info Service Plc (ADVANC) fell by four baht to 199 baht, Total Access Communication Plc (DTAC) 3.25 baht to 42.25 baht, True Corporation Plc 25 satang to 7.35 baht and Jasmine International Plc (JAS) 20 satang to 4.78 baht.
Foreign investors, meanwhile, yanked another 3.36 billion baht out of the Thai stock market yesterday, raising their net selling position to 137 billion for the year.
The magnitude of the Thai stock market’s run-up was smaller than in other Asian bourses.
The Shanghai Composite gained 1.83%, Jakarta Composite 1.62%, Nikkei Stock Average 225 1.59% and FTSE Bursa Malaysia 1.37%.
The baht traded at 36.09 to the greenback compared with 35.96 on Wednesday.
Bank of Thailand governor Veerathai Santiprabhob believes the US monetary policymaker will raise its rate gradually so that markets will not be hurt. A picture of capital outflows in the Thai financial market remains unclear, but monetary policy divergence among advanced economies would cause volatility in the foreign exchange and bond markets of emerging economies.
“Major currencies would experience greater volatility, so business sectors should manage and hedge against foreign exchange risks,” he said.
Central bank deputy governor Mathee Supapongse said the Fed’s rate rise was in line with expectations, and no irregularities were spotted in the Thai financial market yesterday.
“The Federal Open Market Committee’s statement was not different from what was expected,” he said. “But we need to watch for any effects on developed and emerging markets. We think these effects will differ.”
Deputy Prime Minister Somkid Jatusripitak said the US interest rate increase would affect Thailand only slightly due to its relatively low foreign debt.
Markets have long expected a rate rise, while Thailand itself has has lowered its proportion of foreign debt since the 1997 crisis, he said.
The government is closely monitoring whether the global economy will recover as expected — if not, more policies may be needed to the boost domestic economy, Mr Somkid added.
Porametee Vimolsiri, secretary-general of the National Economic and Social Development Board, said the rate increase showed the US economy was improving and would boost the global economy.
However, Japan and the EU remain fragile and in need of more stimulus, he said.
Finance permanent secretary Somchai Sujjapongse said the Fed’s rate rise would not affect borrowing costs in the short term but was likely to increase them in the future if the local policy rate was jacked up amid an accelerating global economic recovery.
SET president Kesara Manchusree said the bourse had already priced in the Fed’s tightening cycle.
“If the market had not rebounded [Thursday], it would have shown something was wrong since this has been factored in for several months,” she said.