OIL PRICE ROUT DIMS EQUITY SENTIMENT IN ASIA

Recap: Asian stock markets were subdued last week, weighed down by oil prices that have fallen close to a one-year low as Opec-led efforts to reduce a worldwide glut have stalled. The Thai stock market remained rangebound but investors bought energy stocks on Friday, betting that the oil price fall would be limited.

The SET index moved in a range of 1,573.20 and 1,584.15 points before closing at 1,582.36, up 0.4% from the previous week, in turnover averaging 38.8 billion baht a day. Foreign investors were net sellers of 1.18 billion baht and retail investors sold 3.31 billion. Institutional investors were net buyers of 2.44 billion baht and brokers bought 2.05 billion.

Big movers: AOT led in turnover, adding 4.5% to 46.25 baht; PTT was up 0.3% to 380 baht, and PTTEP lost 1.5% to 86.50 baht. U led in volume, steady at 0.03 baht. Top gainer INSURE surged 52.8% to 55 baht and EIC, the top loser, dipped 17.5% to 0.03 baht.

Newsmakers: Vibrant domestic demand and strong export growth fuelled by a recovery in the euro zone will boost growth in Germany this year and next, the Ifo economic institute said, raising its 2017 growth forecast to 1.8% from 1.5%.

Chinese stocks took a step towards global acceptance when the US index provider MSCI said it would add a selection of Chinese A shares to its Emerging Markets Index after having rejected them for three years.

Japan unexpectedly posted a trade deficit in May, as soaring energy import bills offset export growth. The deficit of ¥203 billion ($1.8 billion) was the first in four months.

The Philippine central bank left its key rate steady at 3%, as expected, as inflation remains manageable despite robust economic growth.

Thai exports in May surprisingly jumped 13.2% year-on-year to US$19.9 billion, the highest in more than four years, as the global economic recovery lifted demand despite baht appreciation. For the first five months of 2017, exports rose 7.2% to $93.26 billion and imports increased 15.2% to $88.21 billion, for a surplus of $5.05 billion. The May reading prompted the Bank of Thailand to revise its full-year export growth forecast to 2.2%.

The government expects at least 20 billion baht in private investment in the Eastern Economic Corridor (EEC) from next year, including electric vehicle projects by two Japanese car assemblers. Investment in robotics worth 12 billion baht is also expected, along with other targeted industries such as medical equipment.

Citi forecasts the Thai economy will expand by 3.4% this year and 3.6% in 2018. It says the global recovery is on track, with growth forecast at 3% this year and 3.3% in 2018 amid receding structural headwinds, a recovery in investment activity and still-low interest rates.

The seven petroleum exploration firms that suspended onshore operations on Sor Por Kor land amid legal concerns are expected to resume operations next week, says the Department of Mineral Fuels. The military regime has invoked Section 44 of the interim charter to resolve the dispute over after suspension, which was ordered by the Administrative Court on June 3. The seven firms include PTTEP, with production from its Sirikit 1 block (S1) declining 55% from 27,351 barrels a day.

The Federation of Thai Industries (FTI) industrial confidence index fell for the second consecutive month in May due to falling production capacity utilisation, in line with weak purchasing power. The index fell to 85.5 in May from 86.4 in April.

Domestic automobile production output in May increased by 0.65% year-on-year to 169,495 units, with car sales rising 0.6% to 66,422 units, the FTI reported. Car exports declined for the 11th consecutive month, dropping by 9.5% to 90,092 units, with shipment values falling 12.7% to 48 billion baht.

Hemaraj Real Estate Investment Trust (HREIT) will acquire an additional 55,131 square metres of leasehold rights worth 1.69 billion baht. The additional rights would raise HREIT’s total assets to 9.69 billion baht, up from 8 billion, with total rental space growing more than 300,000 sq m, up from 261,314 sq m, covering seven industrial estates.

Three institutional investors plan to subscribe to 201 million initial public offering (IPO) shares of B.Grimm Power Plc, with the first day of trade scheduled for July 19. The investors are Asian Development Bank, Muang Thai Life Assurance and Thai Life Insurance. The company announced an indicative price range of 15 to 16.50 baht per share for 651.8 million newly issued shares, with a greenshoe option not exceeding 65.1 million shares.

The national telecom regulator has allocated a pair of five-megahertz blocks on the 800MHz spectrum to provide an internal wireless communication network system for the ThaiChinese high-speed railway project.

Coming up this week: The Energy Regulatory Commission will draw lots for the Solar Farm Phase 2 project today and announce the winners on Wednesday.

Thailand’s manufacturing production index for May, US final firstquarter GDP and euro zone economic confidence for June will be reported on Thursday.

The Bank of Thailand will release May economic data on Friday. Also due are China’s manufacturing and non-manufacturing PMI for June.

Stocks to watch: Krungsri Securities recommends stocks that will benefit from tourism including AOT, MINT and ERW; stocks that will benefit from consumption recovery such as CPALL; infrastructure plays including STEC, UNIQ and SYNTEC; and selected small and mid-caps expected to post good Q2 earnings — ASIAN, BPP, BR, ORI, EA, MTLS, IHL and SYNTEC.

Asia Wealth Securities suggests an EEC theme, with the first beneficiaries to be industrial estate developers, especially AMATA, with major land banks in the EEC provinces. Construction materials beneficiaries will include SCC, SCCC and WIIK. As well, manufacturers with production bases in Chon Buri, Rayong and Chachoengsao will benefit from the 15-year tax exemption for new investments in 10 targeted industries. They include SCC, IRPC, PTTGC, EPG, WIIK and EASTW. Property developers should also be indirect beneficiaries.

Technical view: Tisco Securities tips support at 1,575 with resistance at 1,600. Bualuang Securities sees support at 1,570 and resistance at 1,600.