Market Watch: 2020 budget back on the radar

Following the Constitutional Court’s order for a revote on the second and third readings of the 2020 fiscal year budget bill, which has provided some relief for the government, the issue is now back up for discussion on Thursday. 

Lower House speaker Chuan Leekpai has called for a meeting about the bill on Thursday. Investors are expecting it to be smooth sailing for the bill through the parliament as the bill has been previously scrutinised by the parliament. However, opposition parties seem dead set on another debate on the bill, which is a source of uncertainty right now. 

The Stock Exchange of Thailand (SET) ended on Wednesday with a bang as the index jumped 15.91 points (1.04 per cent) to close at 1539.84, with a relatively high trading value of 54.81 billion baht. 

It was green all the way on Wednesday, in line with other bourses in the region as markets began to lessen their concerns over the coronavirus outbreak. 

The dissipating anxiety coupled with the US Federal Reserve’s announcement that the US economy is becoming more stable gave rise to positive sentiment on Wednesday. 

But the latest news of another surge in the number of infected and deceased in Hubei Province from the coronavirus, in addition to the first case appearing in London could still play on investors’ minds. This means that the SET is still considered to be in an area of turbulence and Krungsri Securities is seeing the index swing between 1515 and 1535.

The securities firm is suggesting shares within the construction group for trade on Thursday as the expected good news from the parliament could be a boon for them. These include STEC, CK, and SEAFCO, and shares within the industrial estate group (AMATA and WHA). 

Other groups of shares to look at are energy (TOP, PTTGC, and SPRC) as the gross refinery margin (GRM) is in the positive zone; the finance group, including MTC, SAWAD, and KTC, as they are riding on the historic low interest rate of 1 per cent; and shares within the export group, including electronics (KCE, HANA, and DELTA), and food (CPF and TU) because of the weakening baht. 

Jitipol Puksamatanan, an investment strategist at SCB Securities said the baht, which opened at 31.16 baht per US dollar on Thursday morning could be trading in the range of 31.10-31.25 baht on Thursday. 

“Today, there is a need to monitor the direction of the money markets in Asia first, as China has updated the number of infected patients in the country, which would create more anxiety in Asia than in the West,” he said. “This means that Asian investors might not be taking as much risk as their US counterparts.”

As US bond yield with ten years’ maturity has increased by 2 basis points to 1.63 per cent, crude oil prices (WTI) have increased by 3.2 per cent to US$51.5 per barrel, and the greenback has become 0.3 per cent stronger than other currencies overnight. 

“The strengthening of the Thai baht in the next period will depend on markets in Asia and weather they will recover strongly or not,” he said. “This depends on two factors, which are the concerns over the economy, and whether risk-taking on investment in risky assets matches the same level as in the US right now.” 

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