Bangkok: Capital markets are keeping a close eye on the 2016 budget entering parliament, easing concerns about conflicts, while Asian stocks are up following the Dow Jones, causing Thai stocks to rebound.

According to Thai News Agency, the Stock Exchange of Thailand index opened rebounding this morning. At 10.16 am, stocks rose 3.45 points, with the index moving at 1,166.87 points. Mr. Kraphat Vorachet, Assistant Managing Director of Krungsri Securities, mentioned that Thai stocks moved in the same direction as Asian stocks and US stocks that rose after the US announced a postponement of the date of the European Union (EU) tax increase of 50%. Additionally, the market received positive factors from the adjustment of US government bond yields, with the 10-year bond yield falling to 4.449% and the 30-year bond yield falling to 4.9572%.

In terms of Thai politics, the market is observing the conflicts of the coalition parties as the House of Representatives considers the 2016 annual budget over three days (28-30 May). The market expects the budget to pass, leading to short-term political stability and easing concerns about conflicts. Regarding MSCI adjusting the weight of Thai stocks, which will take effect when the market closes on 30 May, it may cause some short-term volatility, but the market has already absorbed this news. During this period, investment in Thai stocks should focus on stocks that benefit from the domestic economy and falling interest rates, such as the power plant group and the finance group. Furthermore, since COVID has returned to spread, hospital stocks will also benefit during this period.

Investment diversification in emerging markets continues due to the weak dollar and the Asian economic direction at low inflation. The economy still requires further loosening of monetary policy to support the next phase. For Thai stocks, Mr. Kraphat recommends a ‘Buy on Dip’ strategy.