Thai stocks seen range-bound; rate review in focus

BANGKOK: Thai stocks are expected to move narrowly on Wednesday as beaten-down blue chips attract some bargain hunters but the euro zone's debt crisis, including a rating downgrade for Ireland to junk status, will keep investors cautious.

The benchmark SET index dropped 1.38 percent to a one-week low of 1,062.39 on Tuesday and the market reported $98 million of foreign outflows, the exchange said.

Property shares were among shares that were hit amid worries about rising interest rates, which could lead to higher home loan rates and dent demand.

The Bank of Thailand will meet later in the day and is expected to raise its policy rate by 25 basis points to 3.25 percent.

Broker Phillip Securities advised investors to cut equity exposure to 50 percent of investment portfolios amid rising risk aversion.

"We expect trading volatility in a range-bound day. The market may turn up briefly as it monitor China's Q2 economy and the Thai rate review, where the rate should go up 0.25 percentage point as expected. But euro zone debt worries will cap gains," it said.

China's economy grew 9.5 percent in the second quarter from a year ago, not far off the 9.7 percent expansion in the first three months of the year, countering worries that it is heading for a hard landing.

Asian stock markets edged up following two days of losses.

The MSCI index of Southeast Asia edged up 0.8 percent by 0227 GMT.

COPYRIGHT REUTERS, 2011