MORE VOLATILITY AHEAD
October could be even more volatile. One of the key events in September was the meeting of the US Federal Reserve (Fed)'s Federal Open Market Committee (FOMC).
The Fed raised its key interest rates by 25bps to 2.25 per cent, while keeping it on the "dot plot" path of rate increase, the same as its previous announcement in June.
Ahead of the Fed meeting, yields among Asean countries had been rising in tandem with US yields, only to retreat after the Fed meeting.
After the Fed rate increase, Indonesia's central bank raised its benchmark rates by 25bps to 5.75 per cent the following day, as the market had expected.
On the same day, the Philippines central bank also raised its rates by 50bps to 4.50 per cent , which was also anticipated.
In total, the two Asean central banks have raised their rates by 150bps in the last 5 months.
However, their currencies remain considerably weak, close to historical lows.
These are key risks that need to be closely watched and could impact market sentiment.
Other crucial events that could increase market volatility are, (1) a higher budget deficit in Italy that could raise the government's debt beyond its currently high levels, (2) US sanctions on Iran effective 5 November and (3) US midterm elections on November 6.
Thanawat Patchimkul
Head of Research
DBS Vickers Securities (Thailand)
