NORTH KOREA AND OIL SLUMP KEEP INVESTORS ON SIDELINES
Recap: A long-range missile launch by North Korea put investors back in risk-off mode early last week. A sharp decline in oil prices further dampened sentiment before a Friday rally on Wall Street in response to better-thanexpected job figures for June. A buying spree in energy giant PTT following a recent fall and in banking stocks ahead of second-quarter earnings results helped limit losses in the Thai stock market.
The SET index moved in a range of 1,564.05 and 1,583 points before closing at 1,569.44, down 0.3% from the previous week, in moderate turnover averaging 35.5 billion baht a day. Foreign investors continued to buy Thai shares with a net of 2 billion baht and retail investors bought 3.7 billion. Brokers were net sellers of 2.3 billion baht and institutional investors sold 3.4 billion.
Big movers: AOT led in turnover, adding 2.7% to 48.50 baht; PTT was up 1.1% to 374 baht, and BANPU dived 4.8% to 15.80 baht. GJS led in volume, steady at 0.52 baht. Top gainer DTC surged 25.5% to 12.30 baht and DCORP, the top loser, sank 42.7% to 3.24 baht.
Newsmakers: US Federal Reserve policymakers were split on the outlook for inflation and how it might affect the pace of interest rate increases, according to minutes of the June 13-14 meeting released last week. As well, some officials want to start selling down the Fed’s huge portfolio of Treasury bonds and mortgage-backed securities by the end of August but others prefer to wait longer.
US employers added a betterthan-expected 222,000 jobs in June, the Labor Department reported on Friday. However, the unemployment rate ticked up to 4.4% from 4.3% because more people were looking for work as well.
US factory activity in June rose to its highest level since August 2014, the Institute for Supply Management (ISM) said, suggesting economic growth in the second quarter gained momentum. Construction spending, meanwhile, held steady in May.
US new automobile sales declined in June for a fourth month, despite hefty consumer discounts and looser loan terms. Figures from Autodata put the annualised rate of sales at 16.51 million units, the lowest rate since February 2015.
Manufacturing in China revived in June after unexpectedly contracting in May, as new orders and production rose in a sign of a modest recovery. The Caixin/Markit Manufacturing Purchasing Managers’ index (PMI) rose to 50.4 from 49.6 a month earlier.
Factories across the euro zone ramped up activity in June, with the PMI reaching 57.4, the fastest rate for over six years as rising prices failed to put a dent in orders.
The Bank of Thailand’s Monetary Policy Committee revised up its 2017 GDP growth forecast to 3.5% from 3.4% after revising up export growth to 5% from 2.2%. It lifted its import growth forecast to 10.9% from 7.2%. The Fiscal Policy Office (FPO) said the Thai economy could grow by 4% if disbursement from the 160-billion-baht supplementary midyear budget turns out to be higher than expected.
Energy policymakers resolved to fully deregulate the liquefied petroleum gas (LPG) market by ending the price cap and subsidy system that has been in place for three decades. Now is an ideal time, they say, since world prices are low and LPG consumers will not feel any impact from a change.
Consumer prices dipped for a second straight month in June, mainly due to lower oil prices and baht gains. The government subsequently cut its inflation forecast to a range between 0.7% and 1.7% this year from a previous projection of 1.5% to 2.2%.
New factory registrations in the first half edged down by 1.7% year-onyear to 2,042, with combined investment of 126 billion baht, reflecting investor concerns over the global and domestic economy. Nevertheless, the Industrial Works Department expects a recovery driven by infrastructure projects and interest in the Eastern Economic Corridor (EEC).
Key EEC-related infrastructure projects worth a combined 230.3 billion baht have been approved. They include the latter phases of some deep-sea ports, and the double-track rail network linking the country’s three key ports.
Passenger traffic via Thailand’s major airports increased 7.7% yearon-year in the first five months of 2017, reaching 56.2 million. The growth reflects a recovery of Chinese tourists following the crackdown zerodollar tours that began in July last year.
The Federation of Thai Capital Market Organizations (Fetco) Investor Confidence Index (ICI) as of July was 100.1, in the neutral zone of the 0-200 range and down 1.62% from June.
The junta has delayed by six months the enforcement of huge new penalties for employment of unregistered foreign workers. The about-face followed the exodus of tens of thousands of workers after the introduction of a decree intended to show that the government was getting tough about trafficking. The problem was, employers were not consulted.
The cabinet approved an emergency budget worth 22.9 billion baht for fiscal 2017 to help farmers improve production, such as crop, livestock breeding, and fishery.
The jewellery sector grew only 0.5% in the first half 2017, but the Thai Gem & Jewellery Traders Association is sticking to a full-year growth forecast of 3%.
B. Grimm Power has priced its 716.9 million IPO shares at 16 baht, slightly above the middle of its indicative price range of 15 -16.50 baht, in a deal worth 11.47 billion baht. Its first day of trade on the Stock Exchange of Thailand is set on July 19.
Coming up this week: Tisco Financial Group will open the secondquarter earnings season by releasing its results on Wednesday, followed by other banks.
China will release June trade data on Thursday, the same days as a Bank of Korea meeting. US inflation and retail sales figures are due Friday.
Stocks to watch: Tisco Securities recommends banks expected to report robust Q2 earnings — BBL, TCAP and KBANK. It also recommends dividend plays with low P/E ratios including JASIF, MC, PSH, RATCH, SPALI, SPCG and TMT; and defensive stocks — BCPG, EGCO and TPIPP.
Asia Plus Securities has buy recommendations for AIT, GUNKUL, IRPC, IVL, KKP, LPH, SCB and UNIQ. It suggests allocating 10% to Thai equities, 8% in Japanese stocks, 20% in other Asian stocks, 30% in European stocks, 20% in US shares and the rest in cash.
Technical view: SCB Securities sees support at 1,540 and resistance at 1,585. Bualuang Securities tips support at 1,565 with resistance at 1,600.