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The Thailand SET pulled back 1.38% on Friday to close at 1,245.85, following the Shanghai Composite Index, which tumbled 3.55%, after the People’s Bank of China
(PBoC) said Chinese commercial banks issued 597.8 billion yuan ($90.7 billion) of new loans in December, down from 708.9 billion yuan in November, missing the 700 billion yuan forecast by economists polled by The Wall Street Journal. According to
MarketWatch, "The lower-than-expected new loans suggest that credit demand remained weak, and commercial banks were still reluctant to lend due to rising credit risks," said Li-Gang Liu and Louis Lam, economists with ANZ Research.
All eyes this week were either on crude oil prices or China, as the WTI crude price was down another 6.69% for the week on oversupply concerns and there was a mixed bag of economic data from China. The sanctions imposed on Iran are ending and Iran crude will soon start flowing again into the world market. Iran's Oil Minister Bijan Namdar Zanganeh said in November, at a news conference in Tehran, that Iran won’t negotiate with OPEC or seek the group’s permission before boosting oil exports by a planned 500,000 barrels per day (bpd) once sanctions are lifted. Iran produced 2.8 million bpd of crude oil and exported 1.26 million bpd in November, according to Reuters.
Adding to the volatility was the contract rollover, as the crude oil futures February 2016 (CLG6) contract will expire on January 20. Traders swap a matured contract price with a new one before the old contract expires and the average rollover date from CLG6 to March 2016 contracts (CLH6) is January 17.
The SET breakout attempt failed despite the index running up 1.86% on Wednesday to close at 1,278.61, following the headline news that China's exports and imports fell far less than expected in December. The price of crude rebounded in Singapore on Wednesday as well, after a 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. Analysts were skeptical of whether the surprise gain in exports is sustainable though.
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.
Earlier in the week, 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.
For the week, the SET managed to close up 0.13%. PTT pcl was down 4.19%, as its shares trade along with the crude oil prices. Shares of Big C, Thailand's second-largest hypermarket operator after Tesco's Thai unit, skyrocketed 15.01% this week after Paris-based Casino Group said it would sell its majority stake in Big C, worth $2.6 billion. Casino owns 58.6% of Big C.
The
USD/THB exchange rate was quoted at 36.36 baht per dollar on Friday, up 0.92% since the beginning of the year, while the
CNY/THB slid 0.87% to close at 5.519 baht per yuan. The Thai 10-year bonds were yielding at 2.47% at the close on Friday, down 1.98% so far this year. The yield spread between the Thailand 10-year bond and U.S. 10-year Treasury Note, yielding at 2.03% on Friday, narrowed to 0.44 percentage points. Foreign investors' net sells are 1.075 billion baht since the beginning of the year.
Technically, the SET bounced off the trendline support at 1,220.96, but was unable to break out the neckline resistance of the shooting star chart pattern, at 1,280.63. The index continues to trade in bear market territory, below the 1,295.82 level. There is a probability that the SET could fall back to test the trendline support of the descending (DES) wedge chart pattern, or the January 2014 low at 1,205.44, as the
USD/THB is about to break out the September 30 high, at the 36.50 baht per dollar level.
The weak baht was not a good thing for the Thailand SET last year, particularly when foreign investors still hold almost 4 trillion baht of Thai shares, about 33% of market capitalization, according to data from the SET.
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