The Thai stock market rebounded sharply on Monday, rising by about 1.3%, as other regional bourses also bounced back from sharp losses on Friday as investors believe a full-blown war in the Middle East is unlikely while the People's Bank of China (PBOC) opted to keep interest rates unchanged.
After slipping below a key resistance of 1,350 points at the end of last week, the Stock Exchange of Thailand (SET) index rebounded on Monday with trading dominated by large-cap stocks. The most active stocks by trading value were Kasikornbank (KBANK), Jasmine International (JAS), Siam Commercial Bank (SCB), PTT Exploration and Production (PTTEP) and CP ALL.
The index, which closed at 1,347.10 points by midday with a total trading value of 23.1 billion baht, was also supported by the PBOC's decision to maintain its loan prime rates (LPRs) as global analysts expected 3.45% for the 1-year LPR and 3.9% for the 5-year LPR.
"Israel-Iran issues are delicate, but a full-blown war is unlikely in the Middle East since both Israel and Iran and their allies are showing restraint," said Therdsak Thaveeteeratham, executive vice-president of Asia Plus Securities (ASPS).
Investors heavily bought large cap stocks, especially the banking group whose operating results for the first-quarter were reasonably good, while communication stocks are speculative buys to help support the index to rebound, he said, adding that ASPS anticipates the SET index will move in the range of 1,330-1,350 points in the short term.
"Still, geopolitical conflicts must be watched closely since they cause commodity prices to rise and make it harder to control inflation. Central banks will delay monetary easing and keep interest rates high for longer," it said.
Investors are still awaiting economic data from China, Japan and South Korea to be released next week and the Bank of Japan meets on Thursday on interest rates.
In a related development, SCB Asset Management has issued a more positive view on China's economy and the opportunity to create returns from China's stock market in the long term.