Last Wednesday, Thailand's Monetary Policy Committee came to a fixed resolution of establishing interest rate at 1.50% along with concluding that Thailand's economy is still recovering slowly yet surely. Despite support from government funding, tourism, and increased investments in certain industries in the private sector, there seem to be signs of slowing down stemming from the effects of stimulus spending.
Thailand’s stock market in the final week of March is still set to close at around 1,390-1,410 points. When JAS failed to pay for the 900MHz licenses (worth 75,654 million baht), investors have directed their focus on the ICT industry, believing that the number of mobile operators will decrease.
During the last week, investors have kept their eyes on the US's Federal Open Market Committee (FOMC) and the Bank of Japan meetings.
The United States hasn't announced any increase to interest rates due to the unpredictable fluctuations and volatility of the global economy.
In the past week the European Central Bank on March 10 made the following announcements:
Boosting the qualitative easing budget from 60,000 million Euros to 80,000 million Euros per month including corporate bonds (starting April 2016 and ending March 2017)
Deposit rates will be reduced to -0.40% per year and cut the main financing operation’s interest rates from 0.05% to 0%
Initiating targeted long-term refinancing for a period of four years.
In the last week the foreign investment market is on the rise, with contributing factors such as:
Forecasts stimulus from the European Central Bank and Bank of Japan during meetings in March
Increased oil prices create a positive impact on energy-related stocks
Enhanced reliability due to the increase of US GDP from 0.7% to 1%
China's forecast stimulus that involved reducing the reserve requirement ratio (RRR)
The ECB meeting was held on March 10 where cutting interest rates was discussed.
For the first two months of 2016, international stock markets have experienced an overall decline, especially in China where both the Shanghai and Shenzhen foreign markets struggled with a 20% decline.
The initial figures for the country were released at the beginning of this year which still brought concern and indicated a downturn in the world's economy.
Since the beginning of this year, government bond yields have been experiencing a gradual decline. Short-term bonds of under one year have been reduced by 5-10 bps., bonds between 1-10 years cut down by 9-48 bps. As for bonds with an upwards of 10 years of age have been taken down by 20-45 bps.
Following the auction, government bonds with over 10 years of age (on-the-run government bond) are worth 13,000 million baht. This piqued interest in many investors but only one gained total control, making the sentiment of the bond market in the first week of March, especially towards the end of the week, a lowered one which coincides with the decreased returns of government bonds.
At the beginning of the week, on-the-run bonds (not over 10 years of age) didn't experience any significant change. On Wednesday a meeting was held to auction the oldest government bond (50 years) with an average return rate of 3.2490% per year - a slight 2.50% drop from the indicative yield of the day before.
Last week the Public Debt Management Office had announced its plan to auction off government bonds for the 3rd trimester of 2016's fiscal year amounting to 1.2 billion baht (coming close to the total amounts of the two previous trimesters). Factors from foreign markets include results from the Bank of Japan's meeting concluding that they will continue on implementing relaxed monetary policies.