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The SET closed at 1,490.65 on Monday, up 0.39% after Greek Prime Minister Alexis Tsipras finally capitulated and accepted the framework for the third bailout negotiations, after 17 hours of European leader talks on Sunday. It is not a done deal yet, as Mr. Tsipras needs the Greek parliament vote in the next 48 hours to approve the package of reforms. Germany's Bundestag lower house of parliament will likely vote on Friday on whether to allow Angela Merkel’s government to start negotiations with Greece.
Meanwhile, the Greek banks are still shut and a 3.5 billion-euro debt payment to the ECB is due on July 20. The euro sell-off on Monday doesn’t look good as the currency market could be sending a signal that Greece’s third bailout deal is another kicking the can down the road.
Despite Monday’s 2.41% run-up of the Shanghai exchange and decent exports data for China in June, the SET was unable to break through the trendline resistance, as foreign investors and local individuals, meaning Thai retail investors, were selling into the rally, according to the SET market data.
The USD/THB exchange rate hit a fresh multi-year and intraday high of 34.136 baht per dollar and quoted at 34.042 baht per dollar, as of 16:03:23 GMT on Monday. A weak baht could be good news for the Thai exporters but it could dampen consumer spending. Countries with a weak currency generally have poor economic fundamentals, though.
The 10-year Thailand Government bond yield printed at 2.84%, as of 13:01:53 GMT on Monday. The yield spread between the U.S. 10-Year Treasury Note, yielding at 2.439%, as of 20:05:41 GMT on Monday, and the Thailand 10-Year Government bond, narrowed to 0.401%. Narrowing the bond yield spread and depreciating the Thai baht could spur capital outflows. A sinking 10-year Thailand Government bond yield could signal that more rate cuts from the Bank of Thailand are coming.
One may want to pay attention that during the months of January to June of this year, the average net sells for foreign investors of the SET was about 2.611 billion baht a month, according to the SET market data. Foreign investor selling has been accelerating as the net sells have already registered 17.764 billion baht in less than 2 weeks during the month of July, almost seven times the monthly average net sells in the past six months. Foreign investors make up about 23% of the trading volume on the SET exchange. |
