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It would be a waste of time to discuss the fundamentals as ground zero, the Shanghai and Shenzhen composite indices, are still shaky. More than 1,200 listed stocks from both exchanges have halted trading. The China Securities Regulatory Commission (CSRC) has now banned major shareholders of companies from selling shares for six months. It is a bad idea as selling could resume after those shares are reopened for trading. But if it works, why not?
The SET closed at 1,472.57 on Thursday, up 0.16% along with the Shanghai composite index, which rocketed 5.76% higher to 3,709.331 at the close. The bears are skeptical though, as 40% of all Chinese stocks are now halted. The good news is 1,469.1, or the 61.8% Fibonacci retracement level, still holds for now. The bad news is that the price action shows indecision, represented by a spinning top candlestick with a long upper shadow, long lower shadow and small real body. As the symmetrical triangle chart patterns have broken down, the falling wedge breakdown could send the SET downwards, towards 1,375.99 and lower. If the SET breaks down below the 1,450 technical level, the 5-year lower trendline support, it could head even lower to test the long-term supports at 1,307 and 1,110.
Greece submitted the debt reform proposals just before the deadline at midnight CET. Germany might give Greece a break as German Finance Minister Wolfgang Schäuble just said that Greece would need some debt restructuring as part of any new loan program to make its economy viable. Greek PM Tsipras also got an ultimatum to reach a deal by the end of the week, or face a Grexit. An exit from the eurozone could very well mean that Greece would have to ditch the euro and switch back to the drachma. And that would be a nightmare.
The USD/THB exchange rate hit a multi-year and intraday high of 34.076 baht per dollar yesterday and is still bouncing around the 33.939 baht per dollar level. A weak baht could be good news for the Thai exporters but it could dampen consumer spending, though. The 10-year Thailand Government bond yield printed at 2.82%, down 5.37% since Friday. The yield spread between the U.S. 10-Year Treasury Note, yielding at 2.303% as of 17:51:46 GMT, and the Thailand 10-Year Government bond, narrowed to 0.517%. A sinking 10-year Thailand Government bond yield could signal that more rate cuts from the Bank of Thailand are coming. |
