KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
The recent rally of the Thai baht is facing uncertainty as markets respond to the latest political developments ahead of the Bank of Thailand’s (BOT) policy meeting this week.
Key Highlights:
Baht’s Rally at Risk: The Thai baht, one of the region’s top-performing currencies since July, has benefited from a tourism rebound after hitting a near two-year low against the dollar in May. However, the recent political upheaval, including Paetongtarn Shinawatra's election as the new prime minister and the ousting of her predecessor by the courts, may derail the baht’s resurgence.
Bearish Outlook: Analysts, including Jeffrey Zhang, an emerging markets strategist at Credit Agricole CIB HK Branch, maintain a bearish view on the baht, forecasting a decline to 36.0 per dollar by the year’s end. Concerns over Thailand’s long-term growth prospects and potential lower neutral rates are contributing to this outlook.
Technical Vulnerability: The baht’s recent gains against the dollar are seen as technically vulnerable, with some forecasters predicting it could weaken to as low as 37.5 per dollar by the end of the year. On Friday, the baht closed at 34.6.
Central Bank Decision: Traders are now focused on the BOT’s upcoming policy decision, where the central bank is expected to keep interest rates unchanged at 2.50%. However, the narrowing yield differentials between Thailand and the US, due to potential Federal Reserve rate cuts in September, may provide some support for the baht.
Political and Economic Concerns: Despite the BOT's likely decision to hold rates, the baht may still face near-term weakening due to ongoing political uncertainty. The elevated household debt and concerns over investment attractiveness are additional factors weighing on the currency. Paetongtarn Shinawatra has criticized the central bank and advocated for lower interest rates, which could further impact economic policies.
Digital Wallet Program: Reports suggest that the new government may scrap a planned US$14 billion digital cash handout program. If confirmed, this could lead to delays in the 2025 budget and impact economic growth expectations.
Outlook: The baht's recent strength is under threat from both political and economic uncertainties. While the BOT's policy decision this week may offer temporary support, the long-term outlook remains cautious as markets weigh the implications of ongoing political drama and economic challenges.
Comments
Post a Comment