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The SET surged 1.86% to close at 1,278.61 on Wednesday, following the headline news that China's exports and imports fell far less than expected in December, and that the report from the American Petroleum Institute (API) showed a decline of 3.9 million barrels in U.S. crude-oil inventories last week, compared with analysts' expectations for an increase of 2.5 million barrels, according to Reuters. Small investors were selling into the rally, as they aren’t convinced that the rally will last.
The China General Administration of Customs reported on Wednesday that December exports fell 1.4% from a year earlier, compared with a Reuters poll forecast for an 8.0% drop, after a 6.8% decline in November. December imports fell 7.6%, exceeding economists' expectations of an 11.5% slide, after an 8.7% drop in November. China’s trade surplus was $60.09 billion for December, compared with economists' expectations of $53 billion, and November's $54.1 billion, according to Reuters.
On Wednesday, the University of the Thai Chamber of Commerce (UTCC) said that Thai exports to China will decline 1.1% this year to about 850 billion baht. Exports to China will make up 10.8% of Thailand's total shipments this year, compared to 11.1% in 2015, according to the Bangkok Post.
The Nikkei Asian Review reported on Tuesday that foreign investment in Thailand plunged 78% year-on-year, for the January-November period of 2015. Japan remained in the lead of foreign investments, but the amount took an 81% nosedive to 28.3 billion baht, while investments from China tumbled 21% to 13.3 billion baht.
The Shanghai composite index continues to slide, down 7.43% in the past three trading days, despite that the People’s Bank of China (PBoC) repeatedly intervened in the offshore yuan market in Hong Kong on Tuesday, following efforts to talk up the currency by bank officials on Monday, according to Bloomberg. By intervening in the Hong Kong market, the PBoC is trying to curb the gap between the onshore (CNY) and offshore yuan (CNH) rates, which has triggered capital outflows in the past few weeks. According to The Wall Street Journal, Chinese consumers race to buy dollars as the yuan slides, leading to cash shortages at some banks, along with delays in completing transactions.
The USD/THB exchange rate was quoted at 36.288 baht per dollar on Wednesday, up 0.72% since the beginning of the year, while the CNY/THB slid 0.912% to close at 5.5164 baht per yuan. The Thai 10-year bonds were yielding at 2.555% at the close on Wednesday, up 1.39% so far this year. The yield spread between the Thailand 10-year bond and U.S. 10-year Treasury Note, yielding at 2.093% on Wednesday, narrowed to 0.462 percentage points.
Technically, the SET has been moving in a bullish descending (DES) wedge pattern and bounced off the trendline support at 1,220.96. The index continues to trade in bear market territory, below the 1,295.82 level, and is now testing the trendline resistance of the descending wedge at 1,278.61. Downside risk, however, persists if the index can’t close above the neckline resistance of the shooting star chart pattern, at
1,280.63. |
