"Fiscal cliff" deal boosts Thai shares, export

Thai shares today skyrockets in tandem with regional bourses, as investors welcomed the United States' move towards a bipartisan bill to avoid tax hikes and postpone spending cuts.

The Stock Exchange of Thailand composite index rose 16.98 points or 1.22 per cent as of 3.33pm. As the market reopens after New Year holidays, the index is now 1,408.91 points.The index ended the day at 1,407.45 points, up 15.52 points or 1.11 per cent, on turnover of Bt38.7 billion.

The closing on the first trading day of Jan 2 is the highest in 16 years and 11 months.

As the world’s largest economy is apparently avoiding the "fiscal cliff" and a potential recession, Kasikorn Research Centre expects Thailand’s export sector to reap direct and indirect benefits from the agreement.

According to K Research, though the bill is not a complete solution, but it gives a positive signal to end the fiscal cliff, which would reduce risks to the global economy including Thailand.

"The passage of this law would send direct and indirect benefits to Thailand. A direct benefit will be reflected through continued growth momentum in the US economy. Coupled with the recovery in China, this should foster the Thai export sector and allow it to remain a major economic driver this year," the research house said.

It expects Thailand’s exports to expand 10-15 per cent this year, which should pave way for the economic growth of 5 per cent in 2013.

Indirectly, the bill would lead to greater stabilisation in the US dollar, which would reduce volatility in the foreign exchange market.