Thai shares set for trading in a narrow range today, less than 24 hours before the official announcement of the result of the Brexit vote around Friday noon (Bangkok time). Investors are expected to sit tight on the sidelines, not making big bets on the market with the race too close to call. Post Brexit vote market adjustments could be either up or down vigorously. Local factors today are bit and piece and should not have much weight on the direction of the market.
Local issue
Policy rate kept unchanged. The Bank of Thailand’s Monetary Policy Committee (MPC) yesterday voted unanimously to keep its policy rate unchanged at 1.5% as the committee believes the economy would continue to recover based on public expenditure and tourism expansion, while private consumption has expanded as anticipated. Meanwhile, the MPC maintained its FY16 GDP growth forecast at 3.1%, together with keeping headline and core inflation estimates at 0.6% and 0.8%, respectively. (Bangkok Post)
Policy rate kept unchanged. The Bank of Thailand’s Monetary Policy Committee (MPC) yesterday voted unanimously to keep its policy rate unchanged at 1.5% as the committee believes the economy would continue to recover based on public expenditure and tourism expansion, while private consumption has expanded as anticipated. Meanwhile, the MPC maintained its FY16 GDP growth forecast at 3.1%, together with keeping headline and core inflation estimates at 0.6% and 0.8%, respectively. (Bangkok Post)
BoT remains unfazed over Brexit. The assistant governor of BoT’s monetary policy group Jaturong Jantarangs said Britain’s departure from the EU would have minimal direct impact on Thailand’s economy in the short run but could pose a long-term threat. However, he declined to specify measures that the BoT adopted to handle both scenarios regarding the British referendum, but stated Brexit was not the reason why MPC kept policy interest rate unchanged at 1.5%. (Bangkok Post)
‘Power shortage’ if newcomers win gas deals. Energy Policy and Planning Office (EPPO) said Thailand could face a power shortage in 2020 and 2021 if newcomers win the upcoming petroleum auctions for the Erawan and Bongkot gas fields after the current concessions expire in 2022-2023, as existing producers (Chevron and PTTEP) may cut their investments prior to the end of their concessions which would consequently reduce gas production by 1,500 million cubic feet per day. (The Nation)
Comment: We do not believe there would be a power shortage as the existing operators are more well-informed in the fields and well-positioned to gain a concession extension. If Chevron skips the bidding, we believe PTTEP would make an effort to replace it as the new operator in order to prevent an interruption in Thailand’s gas production.
Global issues
Polls show shift towards 'Remain' for EU vote: Opinion polls published in the days before Thursday's UK referendum have mostly shown a shift towards keeping Britain in the EU, but the "In" camp's lead is small and most pollsters say the race is still looks too close to call. Prior to this week's polls, in the period between 10 Jun and 16 Jun, "Out" led in seven of nine polls. Betting odds, provided by gambling firm Betfair, gave the "Remain" campaign an 80% probability of winning, up from as low as 59% last week. (Reuters)
Polls show shift towards 'Remain' for EU vote: Opinion polls published in the days before Thursday's UK referendum have mostly shown a shift towards keeping Britain in the EU, but the "In" camp's lead is small and most pollsters say the race is still looks too close to call. Prior to this week's polls, in the period between 10 Jun and 16 Jun, "Out" led in seven of nine polls. Betting odds, provided by gambling firm Betfair, gave the "Remain" campaign an 80% probability of winning, up from as low as 59% last week. (Reuters)
Federal Reserve Chair Janet Yellen repeated her speech from Tuesday in the second day of testimony to Congress on Wednesday. She played down the risk of a recession, but warned that the British vote and a US hiring slowdown posed risks to the economic outlook. (Reuters)
US Treasuries were steady on Wednesday as investors focused on the Brexit vote. Benchmark 10-year notes were last down 3/32 in price to yield 1.71%, up from 1.70% late Tuesday. Yields fell to an almost four-year low of 1.52% last Thursday as fears over a British exit from the EU accelerated. (Reuters)
The dollar was broadly weaker on Wednesday as risk appetite returned to markets, boosting higher-risk currencies, while sterling and the euro rose on the last day of campaigning before the Brexit referendum. The shift also helped sterling to recover 5% from lows around US$1.40 last week. (Reuters)
USA
Wall Street shares slid in thin trading volumes on Wednesday as investors braced for Thursday's UK referendum on whether to leave the EU. Stocks rose early after a series of upbeat economic data that portrayed decent outlook of the US economy in 2Q16. (Reuters)
Wall Street shares slid in thin trading volumes on Wednesday as investors braced for Thursday's UK referendum on whether to leave the EU. Stocks rose early after a series of upbeat economic data that portrayed decent outlook of the US economy in 2Q16. (Reuters)
US home resales rose in May to a more than 9-year high as improving supply increased choices for buyers. The National Association of Realtors said on Wednesday existing home sales increased 1.8% to an annual rate of 5.53mn units last month, the highest level since February 2007. (Reuters)
Europe
European shares rose on Wednesday, but ended off highs as results of a poll rekindled concerns that Britain may leave the EU hours before voting in the country's membership referendum starts. (Reuters)
European shares rose on Wednesday, but ended off highs as results of a poll rekindled concerns that Britain may leave the EU hours before voting in the country's membership referendum starts. (Reuters)
Asia
North Korean missile shows threat intensifying: A missile launched by North Korea on Wednesday reached an altitude of over 1,000KM (621 miles) showing the Pyongyang regime has made progress developing intermediate range ballistic missiles (IRBM), Japan's Minister of Defence said. (Reuters)
North Korean missile shows threat intensifying: A missile launched by North Korea on Wednesday reached an altitude of over 1,000KM (621 miles) showing the Pyongyang regime has made progress developing intermediate range ballistic missiles (IRBM), Japan's Minister of Defence said. (Reuters)
MAS: Yuan to be part of FX reserves: The Monetary Authority of Singapore (MAS), Singapore's central bank, will include its yuan financial investments in official foreign reserves starting from June, underscoring further progress in China's financial market reforms. (Reuters)
Commodities
Oil prices settled down more than 1% on Wednesday after the US government reported a smaller-than-expected inventory drawdown, and as investors fretted about the Brexit vote. The US EIA reported a stockpile decline of 917,000 barrels last week, smaller than a 1.7mn-barrel drawdown forecast by analysts, and only about a third of the 5.2mn-barrel drop reported by the API on Tuesday. Brent crude futures settled down 74 cents (-1.5%) at US$49.88 a barrel. August US crude futures fell 72 cents (-1.4%) to settle at US$49.13. (Reuters)
Oil prices settled down more than 1% on Wednesday after the US government reported a smaller-than-expected inventory drawdown, and as investors fretted about the Brexit vote. The US EIA reported a stockpile decline of 917,000 barrels last week, smaller than a 1.7mn-barrel drawdown forecast by analysts, and only about a third of the 5.2mn-barrel drop reported by the API on Tuesday. Brent crude futures settled down 74 cents (-1.5%) at US$49.88 a barrel. August US crude futures fell 72 cents (-1.4%) to settle at US$49.13. (Reuters)
Gold fell to a two-week low on Wednesday after its biggest one-day drop in four weeks, as expectations that Britain will vote to remain in the EU reduced risk aversion. Spot gold hit a two-week low of US$1,261.01 an ounce and was down 0.1% at US$1,266.60 an ounce, little changed from late on Tuesday. US gold futures for August delivery settled down 0.2% at US$1,270 an ounce. (Reuters)
Source: aws.co.th / settrade.com
