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The SET has gyrated for the last three trading days, after the Islamic terrorist group, Islamic State of Iraq and Syria (ISIS), released a video on Monday threatening Washington D.C. with Paris-style attacks. The fear of a bomb threat by the group on Tuesday resulted in the cancellation of the Germany-Netherlands soccer game in Hannover, Germany, less than two hours before kickoff, as Chancellor Angela Merkel was on her way to the match. The French police's raid on suspected terrorists in a Paris suburb on Wednesday morning, which ended up with 2 terrorists dead and 7 terror suspects arrested, added more chaos to the situation.
Since Friday, the SET is down 0.41% as of Wednesday' close at 1376.82, despite that the National Economic and Social Development Board (NESDB) of Thailand said on Monday that third-quarter gross domestic product (GDP), came in at 1% on a quarter-on-quarter basis, beating the Bloomberg median estimate of 0.6%. On a year-on-year basis, the GDP climbed 2.9%, exceeding the median forecast of 2.5%. The NESDB also said that tourist arrivals last quarter totaled 7.3 million, a 24% increase from a year earlier. Tourism in Thailand makes up about 10% of GDP.
Separately, the NESDB said on Wednesday that the Thai economy is expected to grow 2.9% in 2015, the highest level in three years, citing increases in government spending and investment. The Bank of Thailand (BOT) had previously forecasted economic growth of 2.7% this year and 3.7% in 2016. It will give its new forecasts next month. Economists in a Reuters poll predict 2.7% growth in 2015.
The financials and resources sectors continue to put a drag on the SET, as the combined weights of both sectors in the index are over 40%. Shares of Siam Commercial Bank, the worst performer in the financials sector, tumbled another 2.62% in the past three trading sessions, while PTT plc, top constituent of the SET50 and the energy sector, tanked another 4.71%.
Additional SET selling pressure is also mounting as the U.S. Federal Reserve is planning to hike interest rates in December. The Fed just released its minutes of the October 27-28 FOMC meeting which said, “Most participants anticipated that, based on their assessment of the current economic situation and their outlook for economic activity, the labor market, and inflation, these conditions could well be met by the time of the next meeting,”.
The federal funds futures, traded on the Chicago Mercantile Exchange and commonly used to estimate the market’s views on the likelihood of changes in U.S. monetary policy, indicate 32.2% odds for a quarter-point rate hike and 67.8% odds for a half-point rate hike at the Fed's December FOMC meeting, according to data from the CME Group as of November 18.
From our technical viewpoint, the SET is retesting the lower trendline support of the bearish ascending broadening (ASC/B) wedge chart pattern. The bullish higher low (H-L) chart pattern, meaning every low is higher than the previous low while every high is higher than the previous high, will break down if the SET closes below 1,341.30. Sentiment will become increasing bearish, very fast, if the ascending broadening wedge breaks down. This could send the SET back to the base of the wedge, at about the 1,320 level, or below the 1,300 level.
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