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

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%.