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The SET continued to gyrate between 1,401 and the trendline support (T/S) this week, after Turkish fighter jets shot down a Russian warplane near the Syrian border on Tuesday and the Islamic terrorist group, Islamic State of Iraq and Syria (ISIS), is still threatening Brussels, Belgium, with Paris-style attacks. Ironically, NATO headquarters is located in Brussels, but on the northeast perimeter of the city.
Turkey may have to pay the price for being quick on the trigger, as Russia can use its natural gas ties with Turkey as a geopolitical weapon. Russia, the largest supplier of natural gas to Turkey, exported 27.33 billion cubic meters of natural gas to Turkey last year. Russia’s Gazprom is currently in talks with Turkey about building a natural gas pipeline, called Turkish Stream, to ship Russian gas underneath the Black Sea to Turkey. The deal is now at risk.
The USD/THB exchange rate was quoted at 35.649 baht per dollar on Wednesday, down 0.26% from the close on Friday. The spread between the Thailand 10-Year Government bond yield, yielding at 2.77%, and the U.S. 10-Year Treasury Note yield, yielding at 2.232%, has now narrowed to 0.538 percentage points. This will likely trigger capital outflows and another wave of foreigner selling on the SET. The foreign investors net sells were 118.4 billion baht year-to-date, compared to about 8.85 billion baht during the same period last year.
More selling could be coming from Thai institutional investors next year, as Thailand’s Government Pension Fund, with over 700 billion baht under management, said in a Bloomberg interview last Friday that they are considering buying equities in Japan and Europe next year as higher U.S. interest rates weigh on emerging-market assets.
This is a short trading week as the U.S. financial markets are closed on Thursday and are only open for a half-day on Friday, and hence, the SET could be trading sideways until next week. Nonetheless, sentiment will become increasing bearish, very fast, if the ascending broadening (ASC/B) wedge chart pattern 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. |
