SET index rallies on trade row cooling
The Stock Exchange of Thailand (SET) index rallied yesterday to an eightmonth high as investors priced in growing external optimism over lessened trade tensions and dovish monetary policies.
The Sino-US trade spat has temporarily subsided after US President Donald Trump’s assurance via Twitter of an “extended meeting” with Chinese President Xi Jingping at next week’s G20 summit in Japan.
Mr Trump also said he had a “very good telephone conversation” with his Chinese counterpart.
Sentiment was further moved by the European Central Bank president’s comments on the possibility of further monetary stimulus, given that GDP growth in the euro-zone bloc hasn’t improved, said Nuttachart Mekmasin, executive director of Trinity Securities’ research department.
“Market participants have priced in positive developments on the lower interest rate outlook and [bilateral] trade talks, but they have yet to price in results of the trade talks, which are still shrouded in uncertainty,” Mr Nuttachart said.
Thailand’s benchmark index closed yesterday at 1,705.98 points, up 22.38 points or 1.3% from the previous day, in heavy turnover worth 107.6 billion baht.
Institutional investors were the largest net buyers of shares at 9.35 billion baht.
The SET index’s rally was in line with gains seen in other Asian indices, with Hong Kong’s Hang Seng up 2.6% and Japan’s Nikkei 225 up 1.7%.
Large-cap shares contributed to the rally of the Thai bourse, with AOT up 8.5%, followed by TRUE (+4.7%), BTS (+2.6%) and TOP (+2.5%).
Investors speculated in Airports of Thailand shares after King Power promised AoT that it would pay a guaranteed 23.5 billion baht for first-year operations of commercial areas at Suvarnabhumi duty-free shops and other shops located in Phuket, Chiang Mai and Hat Yai airports, said SCB Securities managing director Sukit Udomsirikul, noting that the sum is higher than the 14.5-billion-baht estimate of SCBS.
NOT TOO HIGH
Telecom shares listed on the SET index also rallied yesterday after the three major mobile operators agreeing to buy slots on the 700MHz band for a combined 56.44 billion baht through 10 years of instalments.
The combined cost is not high compared with the average auction cost paid in eight European countries, where the amount does not exceed 40 million baht per MHz per year, said Asia Plus Securities (ASP) analyst Suwat Wattanapornprom.
“The cost shouldered by Thai operators will be compensated by net interest expenses with the National Broadcasting and Telecommunications Commission extending the payment period,” Mr Suwat said.
The three mobile operators, however, must be prepared for additional bandwidth investment in the near future, as foreign countries have allocated hundreds of bandwidth per auction, Mr Suwat said.
The three operators are still suffering from the high auction cost for 4G technology, according to ASP.
“We do not see much transaction volume to be used on 5G technology,” Mr Suwat said. “There are also few mobile devices that are ready for 5G compatibility.”