Post by Deleted on Oct 5, 2013 11:29:53 GMT 7
Foreign stock investors remain in sell mode
The Nation October 5, 2013 1:00 am
Foreign investors remained net-sellers of Thai shares in the first four trading days of October, despite the US shutdown, fuelling speculation of continued quantitative easing.
Optimism on the US Federal Reserve's QE programme is now shattered by growing concern that a stand-off in Washington over the federal budget could lead to a government debt default and another nightmare for the global economy.
US lawmakers last month failed to reach a compromise over a funding bill, leading to the partial shutdown on October 1 when more than 800,000 federal workers were furloughed. In these circumstances, the Fed is expected to maintain the pace of its bond-buying programme at US$85 billion (Bt2.66 trillion) a month. This is expected to buoy emerging stock markets further, including Thailand.
Foreign net-sells amounted to Bt2.32 billion yesterday, aggregating combined net-sells in the first four days of this month of Bt3.02 billion.
On the first three days, Thai shares actually rose on anticipation that the QE would continue. The SET Index gained 1.81 per cent on October 1, 0.06 per cent on October 2 and 1.43 per cent on October 3.
The Stock Exchange of Thailand edged down 1.46 points or 0.10 per cent to 1,427.72 points yesterday, along with other Asian bourses as the debt ceiling fear grows. Yesterday's turnover was only Bt31.44 billion, suggesting low investor appetite for equities.
On the fourth day of a partial government shutdown that shows no signs of ending, US House Speaker John Boehner tried to unite his fellow Republicans around a plan to reopen the federal government, raise the debt ceiling and achieve as many of the party's priorities as they could. Boehner is under pressure from multiple factions in his own party.
In a speech to George Washington University in the US capital on Thursday, International Monetary Fund managing director Christine Lagarde reiterated that the United States needs to "slow down and hurry up". She said it needed to replace the sequester (automatic spending cuts) with more back-loaded measures that do not hurt the recovery. At the same time, the US needs to do more to make debt sustainable down the road - by containing the growth of entitlement spending and raising revenues.
"In the midst of this fiscal challenge, the ongoing political uncertainty over the budget and the debt ceiling does not help. The government shutdown is bad enough, but failure to raise the debt ceiling would be far worse, and could very seriously damage not only the US economy, but the entire global economy. So it is 'mission-critical' that this be resolved as soon as possible," she said.
In an interview yesterday, Payungsak Chartsutipol, chairman of the Federation of the Thai Industries, maintained his optimism that there would be a compromise, adding that a failure would have a negative domino impact on the global economy.
"The US economy is recovering. Its government should not delay in resolving the shutdown and [raising] the debt ceiling soon. With a quick solution, the US economy should grow continuously next year, as well as benefit the world economy and Thailand's expansion," he said.
Thanavath Phonvichai, director of the Economic and Business Forecasting Centre of the University of the Thai Chamber of Commerce, said the US should come out with a clear solution. The $16.7-trillion debt ceiling, which already accounts for 100 per cent of gross domestic product, should be increased, otherwise it would hurt global growth next year.
The Nation October 5, 2013 1:00 am
Foreign investors remained net-sellers of Thai shares in the first four trading days of October, despite the US shutdown, fuelling speculation of continued quantitative easing.
Optimism on the US Federal Reserve's QE programme is now shattered by growing concern that a stand-off in Washington over the federal budget could lead to a government debt default and another nightmare for the global economy.
US lawmakers last month failed to reach a compromise over a funding bill, leading to the partial shutdown on October 1 when more than 800,000 federal workers were furloughed. In these circumstances, the Fed is expected to maintain the pace of its bond-buying programme at US$85 billion (Bt2.66 trillion) a month. This is expected to buoy emerging stock markets further, including Thailand.
Foreign net-sells amounted to Bt2.32 billion yesterday, aggregating combined net-sells in the first four days of this month of Bt3.02 billion.
On the first three days, Thai shares actually rose on anticipation that the QE would continue. The SET Index gained 1.81 per cent on October 1, 0.06 per cent on October 2 and 1.43 per cent on October 3.
The Stock Exchange of Thailand edged down 1.46 points or 0.10 per cent to 1,427.72 points yesterday, along with other Asian bourses as the debt ceiling fear grows. Yesterday's turnover was only Bt31.44 billion, suggesting low investor appetite for equities.
On the fourth day of a partial government shutdown that shows no signs of ending, US House Speaker John Boehner tried to unite his fellow Republicans around a plan to reopen the federal government, raise the debt ceiling and achieve as many of the party's priorities as they could. Boehner is under pressure from multiple factions in his own party.
In a speech to George Washington University in the US capital on Thursday, International Monetary Fund managing director Christine Lagarde reiterated that the United States needs to "slow down and hurry up". She said it needed to replace the sequester (automatic spending cuts) with more back-loaded measures that do not hurt the recovery. At the same time, the US needs to do more to make debt sustainable down the road - by containing the growth of entitlement spending and raising revenues.
"In the midst of this fiscal challenge, the ongoing political uncertainty over the budget and the debt ceiling does not help. The government shutdown is bad enough, but failure to raise the debt ceiling would be far worse, and could very seriously damage not only the US economy, but the entire global economy. So it is 'mission-critical' that this be resolved as soon as possible," she said.
In an interview yesterday, Payungsak Chartsutipol, chairman of the Federation of the Thai Industries, maintained his optimism that there would be a compromise, adding that a failure would have a negative domino impact on the global economy.
"The US economy is recovering. Its government should not delay in resolving the shutdown and [raising] the debt ceiling soon. With a quick solution, the US economy should grow continuously next year, as well as benefit the world economy and Thailand's expansion," he said.
Thanavath Phonvichai, director of the Economic and Business Forecasting Centre of the University of the Thai Chamber of Commerce, said the US should come out with a clear solution. The $16.7-trillion debt ceiling, which already accounts for 100 per cent of gross domestic product, should be increased, otherwise it would hurt global growth next year.