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Markets

Thai stocks pare gains as central bank holds rates, flags recovery risks

  • South Korea and India each climbed over 1%, while the Indonesian, Singaporean and Malaysian indexes added 0.5%.
Published February 3, 2021

Thai stocks pared some gains on Wednesday after the central bank held its key interest rate but warned that the resurgence in COVID-19 cases could hinder the country's economic recovery.

The benchmark, which had climbed as much as 0.9% earlier in the day, was trading flat by 0827 GMT. The baht was little changed.

The Bank of Thailand kept the rate unchanged in a widely expected move but warned that the tourism-reliant economy could grow less than earlier forecast this year, with fewer foreign tourists coming in than previously predicted.

Analysts have raised concerns about setbacks to a revival in consumption and tourism amid a resurgent COVID-19 cluster in the country since December last year.

"As of now, we expect the GDP growth for 2021 to be just 2.2% with a higher probability of further revision downward to below 2% growth due to delayed vaccine distribution and clouded tourism outlook," Poon Panichpibool, markets strategist at Krung Thai Bank said.

In such a scenario, the government will need to take more stimulus measures and spend around 300 billion baht to 400 billion baht ($10.0 billion to $13.3 billion) during the year, said San Attarangsan, an economist at Kasikornbank.

Most other stock markets in the region posted gains, taking positive cues from a Wall Street rally overnight on renewed hopes for US President Joe Biden's proposed $1.9 trillion COVID-19 aid bill.

South Korea and India each climbed over 1%, while the Indonesian, Singaporean and Malaysian indexes added 0.5%.

However, concerns over economic growth in the region lingered.

A private sector survey showed China's services sector activity grew at its slowest pace in nine months in January, while a Reuters poll suggested Indonesia is expected to post its first annual contraction in gross domestic product (GDP) since 1998 on Friday.

Philippine stocks, which clocked in gains of about 4% in the last two sessions, bucked the trend to shed 0.1%.

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