THAILAND has welcomed the victory of the pro-European centrist Emmanuel Macron in the French presidential election, banishing for now the spectre of another departure from the European Union and steadying the nerves of investors.
Kobsak Pootrakool, Vice Minister for the Prime Minister’s Office, yesterday said Macron’s win over far-right candidate Marine Le Pen, who had vowed to hold a referendum on the country’s EU membership, was good news for Thailand.
The poll result would have a positive impact on the global economy in the second half of this year, Kobsak said. The European economy had bottomed out and would gradually recover, while the US economy has picked up, while only Japan and China would take more time to recover, he added.
He said the Thai economy would benefit from an export recovery under way, estimating that overseas shipments would expand between 8 per cent and 9 per cent per month for the rest of this year. The Commerce Ministry forecasts export growth of 5 per cent this year.
The Thai bourse is expected to rise this week in line with stock markets worldwide in reaction to the Macron victory, which removes the fear of a global economic jolt from a potential French exit from the EU, had Le Pen been able to deliver on a referendum promise. However, concerns persist over expected capital flows out of emerging markets and over US trade policy with the protectionist sentiment in the Trump White House, according to a brokerage.
Warut Sivasariyonon, managing director for the research division at Asia Wealth Securities, said relief washed over global markets yesterday with the victory of the pro-EU Macron.
The Netherlands had earlier experienced similar ructions in the campaign for national elections that were ultimately won by EU defenders. The next test comes in September with a federal election in Germany, where a populist party has become an outlet for rising discontent, including against the EU.
Meanwhile, concerns in Asia have grown over the increasingly large volumes of capital shifting to Europe and the US, where the central bank is on a tightening course for monetary policy. Earlier, the European Central Bank signalled that if the risks in European politics eased, the ECB will consider winding up its quantitative easing programme, possibly by the end of this year. Given a sharp rise in the US non-farm payrolls in April, there is a higher chance for a further rise in US interest rates.
The Stock Exchange of Thailand Index (SET Index) is expected to move in a range of 1,559-1,573 points this week. The SET Index yesterday closed at 1,568.02 points, down 0.06 per cent.
Warut said that stocks with satisfactory results remain in focus, but investors will still be troubled by the capital outflows from emerging markets and US trade policy uncertainties.
Asia Wealth Securities is optimistic on Muangthai Leasing (MLTS), with a target price of Bt35 this year on expectation of strong profit in the first quarter of 2017 and further strong quarters. MLTS' loan book is expected to climb 70 per cent this year, with net profit increases of 42.4 per cent and 42.6 per cent forecast for 2017 and 2018, respectively.
On the currency front, the Bank of Ayudhya forecasts the baht will trade between 34.40 and 34.80 to the US dollar this week after closing at 34.68 last week, with the focus on a Bank of England meeting this week. Last week, foreign investors had net sales of Bt3.1 billion in the stock market, and were net buyers of Bt9.2 billion in the bond market.