STIMULUS HOPES AND CHINESE GDP CHEER STOCK INVESTORS
Recap: Hopes that British and Japanese policymakers would ramp up economic stimulus bolstered risk appetites in global stock markets. China’s better-than-expected secondquarter GDP also buoyed sentiment. The Thai market tracked the global trend.
The SET index moved in a range of 1,463.65 to 1,498.13 points and closed at 1,492, up 2.5% on the week, in heavy turnover averaging 66.3 billion baht a day. Retail investors were net sellers of 15.6 billion baht and brokers sold 940 million. Foreign investors were net buyers of 16.3 billion baht and institutional investors bought 224 million more than they sold.
Big movers: BTW surged 52% above its 3.75-baht IPO price on its first trading day on July 11. It closed its first on the MAI at 4.58 baht. TRUE, which also led in volume, jumped 13% to 8.70 baht; ADVANC rose 5.6% to 170 baht, and JAS gained 3.8% to 5.50 baht. Top gainer SAWANG jumped 41.5% to 24.2 baht, while top loser U dipped 25% to 0.03 baht.
Newsmakers: The number of Americans filing for unemployment benefits held steady near a 43-year low last week, pointing to further momentum in the labour market after job growth surged in June. Another report showed producer prices recorded their biggest gain in a year in June on rising costs for energy products and services. The signs of sustained strength could allow the Fed to raise interest rates later this year.
China’s economy expanded 6.7% year-on-year in the second quarter, the same as in the first quarter but slightly above forecasts, as stimulus measures from the government and the central bank helped shore up demand.
China’s exports fell in June as global demand remained weak. Exports fell 4.8% from a year earlier and were down 7.7% in the first half of 2016. Imports dropped 8.4% in June from a year earlier.
China’s foreign direct investment (FDI) jumped 9.7% in June from a year earlier, recovering from a 1% drop in May and hitting a 10-month high.
Japanese PM Shinzo Abe ordered new fiscal stimulus spending after a crushing election victory over the weekend as evidence mounted the corporate sector is foundering due to weak demand.
The Bank of England surprised the market by keeping interest rates on hold at 0.5%, but held out the prospect of stimulus soon to help the economy cope with Brexit.
Singapore’s trade-reliant economy grew more slowly than expected in the second quarter on softer manufacturing and construction. GDP expanded 0.8% from the first quarter, when growth was 0.2%.
Malaysia’s central bank surprised markets by cutting its key interest rate by 25 basis points to 3%, the first cut in seven years, in a bid to keep the country on a “steady growth path”.
Moody’s Investors Service has lowered its assessment of Thailand’s economic strength to “high (-)” from its previous score of “high”, reflecting its concerns over competitiveness and a lacklustre medium-term outlook. The sovereign credit rating of Baa1 remains unchanged
Construction contracts for almost all of the 1.41 trillion baht worth of state-backed infrastructure projects will be signed within this year, says Finance Minister Apisak Tantiworavong. He also said the government was studying the possibility of generating revenue from high-demand commercial land near big-ticket infrastructure projects, particularly rail projects, through a “betterment tax”.
The Industry Ministry is completing a draft plan for the Eastern Economic Corridor (EEC) for cabinet approval next month. It estimates the EEC would attract up to 550 billion baht in investment to the region over the next five years.
Advertising spending was down 8% in the first half of this year, said Nielsen Thailand, with mainstream media affected by the fragile domestic economy as big companies such as Unilever and Toyota cut advertising budgets. Only out-of-home media and internet advertising saw a growth.
The cabinet approved 10 billion baht in seed money for the 100-billion-baht Thailand Future Fund (TFF), which will invest in three road projects including the Bangkok-Rayong motorway, the outer ring road linking Ayutthaya and Pattaya, and the expressway linking Rama III Road with Dao Khanong and Kanchanaphisek Road. Of the 10 billion baht from the Finance Ministry, 1 billion will come from the Vayupak Fund 1 to set up a revolving fund to guarantee a minimum return to TFF unitholders.
The cabinet also approved a special tax break allowing deductions of up to 15,000 baht spent on Otop products from Aug 1-31 from personal income tax.
Banks are vying to persuade civil servants, welfare recipients, payroll clients and digital users to sign up for PromptPay, the money transfer service of the national e-payment system. State-owned Krungthai Bank (KTB) stands to benefit from its large client base of civil servants, said senior executive vice-president Songpol Chevapanyaroj.
Intense competition and price wars in the 4G era continue to squeeze margins and earnings growth in Thailand’s mobile market, says Fitch Ratings. Total Access Communication (DTAC) last week posted a record 90% year-on-year plunge in second-quarter net profit to 141 million baht.
Coming up this week: US housing starts and building permits in June, and the euro zone ZEW expectations survey will be released tomorrow.
Thailand automobile sales figures for June are due on Wednesday.
Bank Indonesia will hold a policy meeting on Thursday, the same day as the European Central Bank meeting.
Stocks to watch: KTB Securities (Thailand) expects that funds will continue flowing into emerging markets including Thailand due to huge liquidity. Stocks expected to be attractive for institutional investors are BANPU, IVL, TOP, ASP and TACC. The broker’s pick is BDMS.
Tisco Securities recommends buying stocks with stories that will support share prices in H2. They include CK, ITD, STEC, UNIQ, PYLON, SEAFCO, SCC, BEM, BTS, AIT, ILINK and ARROW. Its monthly stock picks are ADVANC, BBL, BH, CK, CPALL, MC, QH and UNIQ.
Technical view: DBS Vickers sees support at 1,470 with resistance at 1,500 points. Capital Nomura tips near-term support at 1,451 and then 1,475 with resistance at 1,496.