Markets rebound on coup confidence

Economy June 23, 2014 00:00

By Erich Parpart
The Nation

2,836 Viewed

Financial markets are improving following the coup with the private sector showing increased confidence in the political situation, officials said.


The baht strengthened slightly against the US dollar over the past week, following months of decline, and stocks are up more than 4 per cent over the past month.

Bank of Thailand spokeswoman Roong Mallikamas said political uncertainty at the beginning of the year had weighed down the financial market, which led to a decline in foreign fund flows into Thailand compared to other countries in the region.

The apparent stability that has followed the coup reversed this trend. Domestic investors regained confidence earlier this month and foreign investors have begun to follow suit, Roong said.

“Rising consumer confidence and an economy |that is once again moving forward have brought an increase of inflows of foreign funds this month,” she said, adding that rising confidence had also seen the baht strengthen against the US dollar and other currencies in the region.

The baht was trading at 32.46 to the US dollar on Friday, up slightly from 32.54 on May 20.

Stock Exchange of Thailand president Kesara Manchusree said domestic buying sparked the index’s rise. They were the first to push the index up and once it began to rebound foreign funds began returning, she said.

“It’s clear that the situation is improving due to a more positive outlook,” Kesara said.

As of Friday the SET Index had risen 4.5 per cent, or 64.37 points, from its May 21 close, closing at 1,467.29 compared to 1,402.92 a month ago.

Kesara said domestic funds accounted for 50 to 60 per cent of investment in index. She said the rebound was likely to spur more foreign investment, but that this might not occur immediately.

The index has risen substantially over the past few years and recent gains have been quick, she explained. Many foreign investors will remain on the sidelines until there is more clarity about the country’s economic outlook, Kesara added.

Foreigners who have already bought into the market, however, are likely to hold on to their shares as prices are rising, she said.