23 May 2014
Asia EM Express: Markets unnerved by Thai coup
FXStreet (Łódź) - Following the declaration of martial war law in Thailand at the beginning of the week the situation in the country has been aggravating, with the military announcing a takeover of power on Thursday in a non-violent coup.
As the political turmoil in Thailand has already been going on for some time, with anti-government protests resulting in 28 deaths and the ousting of PM Yingluck Shinawatra, yesterday's developments haven't unsettled the markets. The Thai baht initially fell only slightly against the dollar and today reversed losses, strengthening by 0.2%. The SET index added 0.16% today.
As Jim Reid from Deutsche Bank points out: “During the last Thai military coup of 19th September 2006, the Thai Baht lost 1.3% on the day while the stock market dropped 2.3%, so the reaction this time around certainly has been mild in comparison.”
Nevertheless, Nomura analysts suggest that “If social unrest increases further following the military coup or escalates into an insurgency from its heartlands in the north of the country, the risk of capital flight will also be significant, and not just from foreigners (foreign holdings of debt and equity stood at USD21.4bn and USD69bn as of 30 April 2014 and 22 May 2014 respectively), but also from locals. In this scenario, the risk of capital controls would rise.”
Economic data
China's CB Leading Economic Index slid to 0.9 in April, from 1.2 in March, he Conference Board LEI informed on Friday.
Hong Kong CPI slowed down to 3.7% in April from 3.9% in March, against forecasts of remaining unchanged.
Statistics Singapore informed on Friday that year-on-year inflation accelerated to 2.5% in April, from 1.2% growth in March, slightly less than the expected 2.6% rise.
Taiwanese annual Industrial Production jumped by 4.8% in May, up from the 3.05% increase the previous month and above consensus of +3.5%.
Technicals
On Friday USD/THB was up 0.23% at 32.59
On Thursday the USD/THB daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI was at 59 at the last close, and has climbed to 63 so far today.
In May the Thai Baht has been the worst preforming of Asian currencies, falling by 0.6% against the greenback.
As the political turmoil in Thailand has already been going on for some time, with anti-government protests resulting in 28 deaths and the ousting of PM Yingluck Shinawatra, yesterday's developments haven't unsettled the markets. The Thai baht initially fell only slightly against the dollar and today reversed losses, strengthening by 0.2%. The SET index added 0.16% today.
As Jim Reid from Deutsche Bank points out: “During the last Thai military coup of 19th September 2006, the Thai Baht lost 1.3% on the day while the stock market dropped 2.3%, so the reaction this time around certainly has been mild in comparison.”
Nevertheless, Nomura analysts suggest that “If social unrest increases further following the military coup or escalates into an insurgency from its heartlands in the north of the country, the risk of capital flight will also be significant, and not just from foreigners (foreign holdings of debt and equity stood at USD21.4bn and USD69bn as of 30 April 2014 and 22 May 2014 respectively), but also from locals. In this scenario, the risk of capital controls would rise.”
Economic data
China's CB Leading Economic Index slid to 0.9 in April, from 1.2 in March, he Conference Board LEI informed on Friday.
Hong Kong CPI slowed down to 3.7% in April from 3.9% in March, against forecasts of remaining unchanged.
Statistics Singapore informed on Friday that year-on-year inflation accelerated to 2.5% in April, from 1.2% growth in March, slightly less than the expected 2.6% rise.
Taiwanese annual Industrial Production jumped by 4.8% in May, up from the 3.05% increase the previous month and above consensus of +3.5%.
Technicals
On Friday USD/THB was up 0.23% at 32.59
On Thursday the USD/THB daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI was at 59 at the last close, and has climbed to 63 so far today.
In May the Thai Baht has been the worst preforming of Asian currencies, falling by 0.6% against the greenback.