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Thai markets mixed after election result
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Other Asian currencies, shares fall
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Market sentiment remains weak
By Archishma Iyer May 15 (Reuters) - Uncertainty around election outcomes in Thailand and Turkey hurt their markets on Monday, as doubts about government formation hurt Thai stocks even after pro-democracy parties had a stunning win while Turkey polls appeared set for a runoff. The Thai baht was the sole gainer among emerging Asian currencies, poised for its best day in more than a month after Sunday's election placed the liberal Move Forward party and the populist Pheu Thai Party far out in front with most votes counted, even as shares fell. The baht rose as much as 0.8% to trade at 33.705 against the dollar for what could be its best day since early April. Equities in the tourism-reliant economy fell about 1.3% to a week's low, after rising in early trade.
Sunday's election results showed that the Move Forward Party secured the top place over the parties allied with the military, setting the stage for a flurry of deal-making over forming a government in a bid to end nearly a decade of conservative, army-backed rule. "It's quite uncertain at this point so both the baht and SET index could be quite volatile in a sideways trend until it becomes clear which party will decide to form a coalition government with the Move Forward Party," Poon Panichpibool, markets strategist at Krung Thai Bank said.
The benchmark stock index was dragged down predominantly by the utilities sector, after an election promise by the Move Forward party indicated a reduction in electricity costs. Shares in Gulf Energy Development and Global Power Synergy dropped 6.7% and 5.2% respectively.
Meanwhile, other currencies such as the Singapore dollar and the South Korean won slipped as investors stayed on the sidelines ahead of a slew of economic data from China in the coming days. China kept its interest rates unchanged, despite concerns of an economic downturn. Additionally, uncertainty regarding the U.S. debt ceiling talks weighed on investor sentiment, with President Joe Biden set to meet congressional leaders in order to raise the nation's debt limit to avoid a default.
Turkey's lira slipped to a fresh two-month low and the cost of insuring exposure to the country's debt spiked after Sunday's presidential and parliamentary elections showed the race for the presidency might head for a runoff. A potential second round is scheduled for May 28. The lira was trading at 19.64 to the dollar at 0608 GMT, after falling to a two-month low of 19.70 , not far off the lowest level hit this year following deadly earthquakes in February. It was on track for its worst trading session since early November. Parties of both incumbent Tayyip Erdogan and opposition rival Kemal Kilicdaroglu were claiming the lead but sources in both camps admitted they may not clear the 50% threshold to win outright. Turkish commercial lenders pushed up the cost of buying dollars on the interbank market after the central bank asked them to minimise foreign currency sales to companies ahead of the election, Bloomberg News reported, quoting unnamed sources. John Plassard, investment specialist at Mirabaud Group, said Turkish markets should remain highly volatile, regardless of who wins the elections. The economic policies that have undermined the lira will continue if Erdogan remains in power, he said.
"Investors are concerned about the contagion risks to which some European banks are exposed by holding Turkish debt in foreign and local currency," Plassard wrote. "A change of government could put an end to central bank "liraization" policies and put pressure on the lira before the eventual tightening of financial conditions and the new economic framework take effect.
HIGHLIGHTS:
** Indonesian 10-year benchmark yields rise to 6.430%
** Thailand's economic growth quickens in Q1 as tourism
rebounds
** Indonesia April trade surplus beats forecast; exports,
imports fall Asia stock indexes and currencies
at 0545 GMT
COUNTRY FX RIC FX FX INDEX STOCKS STOCKS
DAILY % YTD % DAILY YTD %
%
Japan -0.32 -3.69 <.N225 0.69 12.62
>
China <CNY=CFXS -0.01 -0.85 <.SSEC -0.07 5.85
> >
India -0.08 +0.60 <.NSEI 0.33 1.49
>
Indonesi -0.45 +5.08 <.JKSE -0.66 -2.73
a >
Malaysia -0.47 -2.18 <.KLSE -0.18 -5.03
>
Philippi -0.14 -0.47 -0.03 0.15
nes
S.Korea <KRW=KFTC -0.08 -5.32 <.KS11 0.08 10.77
> >
Singapor -0.01 +0.10 0.02 -1.30
e
Taiwan -0.15 -0.31 <.TWII 0.00 9.65
>
Thailand +0.65 +2.44 <.SETI -0.67 -7.06
>
(Reporting by Archishma Iyer in Bengaluru; Editing by Vidya
Ranganathan and Emelia Sithole-Matarise)
