Global stocks and commodities rebounded ahead of one of the most awaited economic events of the week Jackson Hole symposium.
“Foreign funds are using equities and bonds as tools to speculate on the baht’s strength,” said Pornthep Jubandhu, head of the investment research group at SCB Asset Management Co., the nation’s biggest private money manager with $45 billion of assets. “This rally could be short-lived as fundamentals are very weak with the poor economic outlook, trade dispute and domestic politics.”
Source: Stock Exchange of Thailand, Bloomberg
The Bank of Thailand this week lowered its growth forecast as the U.S.-China trade war hurt exports. Domestic political risk is also rising with the ruling coalition holding just a tenuous majority in the House of Representatives, and the opposition alliance set to fight what it sees as continued military control.
“There is little logic about the gain in domestic equities, currency and some other assets,” said Kavee Chukitkasem, deputy managing director at Kasikorn Securities Pcl. in Bangkok. “The economy is so weak with sluggish consumption, investment, exports and tourism. ”
Meanwhile, the “slim parliamentary majority will probably be the key risk to political stability," he said.
The Australian dollar recovered from the previous week losses against the US dollar. The currency pair plunged to a more than a 10-month low of 0.7106 on Friday.
Good traders manage the downside; they don’t worry about the upside- Mark Minervini.
AUDNZD slip to a fresh monthly low of 1.0433, I expect the pair is likely to see more volatility going forward.