Composite index ends week up 2.24% as 'shutdown' subsides
Foreign investors were on a buying trend this week, pouring a net Bt5.3 billion into the Stock Exchange of Thailand.
Foreign net-buys propelled the SET Index as retail investors shunned the market on worries over political tensions. Foreign investors were net buyers every day this week except yesterday, when their net sales reached Bt366 million.
Since the end of last year, foreigners have been net-sellers of Bt29.75 billion.
The SET experienced a mini-rally, gaining 2.24 per cent from the previou week to close at 1,355.08 points. The index has been advancing since February 27, when it closed at 1,318.05.
Other regional markets also gained this week, with the MSCI Asia Pacific Index up 1.2 per cent.
Stock analysts attributed the re-entry of foreign investors mainly to declining domestic tensions after the end of the “Bangkok shutdown”. Other domestic factors to determine the market sentiment next week depend mainly on the Constitutional Court’s ruling on the Bt2-trillion borrowing bill and the Bank of Thailand’s meeting on the policy rate.
Externally, lower tensions in the Russia-Ukraine crisis gave a boost to emerging markets as well as economic improvements in the United States and Europe.
The European Central Bank yesterday adjusted its forecast for this year’s GDP growth from 1.1 per cent to 1.2 per cent. It also predicted that recovery in the European Union would gather momentum to 1.5 per cent in 2015 and 1.8 per cent in 2016.
KT ZMICO Securities noted that foreign net buys in Thailand were in line with the latest fund-flow report. The report showed that emerging markets rose on the improvement in the US market due to a decline in jobless-benefit claims. The number of new claims in the first week of March decreased by 26,000 to a seasonally adjusted 323,000.
In line with the return of foreign investment, the baht this week strengthened against the US dollar, thanks to increased fund inflows. The Thai currency gained 0.9 per cent this week and 0.1 per cent yesterday to 32.273 per dollar.
“Although political problems persist in Thailand, the direction of the situation is at least turning to better from worse, and that spurred some inflows of funds and provided support for the baht and Thai assets,” Koji Fukaya, chief executive officer and currency strategist at FPG Securities Co, told Bloomberg in Tokyo. “Easing geopolitical risks in the global market from the Russia-Ukraine situation also helped emerging currencies.”
Bank of Thailand spokeswoman Roong Mallikamas said on Thursday that the baht and other regional currencies were on an upward trend as investors were less worried about the situation in Ukraine and reduced their US dollar holding.