PYONGYANG KEEPS INVESTORS ON EDGE, BUT SET ADVANCES

RECAP: Financial markets this week kept a nervous eye on North Korea following a massive nuclear test, with a missile launch possible today as the country celebrates National Day.

The European Central Bank (ECB) kept its policy rate unchanged at zero in line with expectations, while Japanese second-quarter GDP was below the market consensus as private investment slipped.

Locally, the Stock Exchange of Thailand (SET) continued its climb, supported by foreign fund inflows.

The SET index moved between 1,614.30 and 1,647.54 points before closing at 1,635.61, up 1% on the week, in heavy turnover averaging 56.82 billion baht a day.

Foreign investors were net buyers at 3.43 billion baht, brokers bought 2.63 billion and institutional investors 3.92 million.

Retail investors continued to be net sellers for the fourth week at 9.98 billion baht.

NEWSMAKERS: US President Donald Trump surprisingly agreed to a Democratic Party plan to increase the debt limit for three months, fund the government and rush aid to Hurricane Harvey victims. The decision shocked Republican leaders, who wanted to put off a debt ceiling decision until after the 2018 midterm elections.

The European Central Bank (ECB) raised its euro zone economic growth forecast for this year from 1.9% to 2.2%, the fastest in 10 years. ECB president Mario Draghi said the bank would probably make a decision about its stimulus measures next month. It is currently buying €60 billion worth of bonds a month.

China has banned individuals and organisations from raising funds through initial coin offerings (ICO), saying the practice constitutes illegal fundraising. ICOs have become a bonanza for digital currency entrepreneurs, globally and in China, allowing them to raise large sums quickly by creating and selling digital “tokens” with no regulatory oversight. Japan’s economy in the second quarter expanded by 2.5%, far below the initial estimate of 4.0%, dimming hopes for a long-awaited pickup in domestic demand. Malaysia’s exports in July spiked by 30.9%, albeit against a low base the year before, but officials were encouraged by higher shipments of manufactured products and mining goods. Grab, the Southeast Asian ride-hailing service, is considering adding an e-wallet feature for peer-to-peer money transfers as it continues to grow in Thailand. Currently, GrabPay in Thailand offers only credit, debit and cash payments. Thailand’s unemployment rate rose in the second quarter as an influx of new graduates entered the labour market and private investment proved slow. The jobless rate rose to 1.22% or 465,000 people from 1.08% in the same period last year. the NESDB said 39% of the unemployed had university degrees.

The consumer confidence index (CCI) in August ticked up for the first time in four months on expectations of a stronger recovery driven by export and tourism growth and political stability. The University of the Thai Chamber of Commerce said the CCI rose to 74.5 from 73.9 in July.

The Bank of Thailand has further relaxed curbs on capital outflows to improve opportunities for local investors and money changers and create a balance of fund flows to weaken the baht. The overseas indirect investment ceiling under the quota set by the SEC will be lifted to US$100 billion from $75 billion.

Trade volume of gold futures climbed more than twofold last month, buoyed by development in gold products and geopolitical tensions, says the Thailand Futures Exchange (TFEX). Gold futures volume was 33,511 contracts in August, up from 8,957 a year earlier, with a daily average of 1,523 contracts. Bangkok Bank (BBL) will become the first local bank to offer quick response (QR) code payment for debit cards, under a trial being conducted in cooperation with the Bank of Thailand.

COMING UP THIS WEEK: China today will release August consumer and producer price indices, Malaysia will release July manufacturing production data and Indonesia will release retail sales data for July.

China will release August automobile sales figures tomorrow and Japan will release producer price and machinery order updates.

STOCKS TO WATCH: Asia Plus Securities recommends WHA, SCC and UNIQ. In the short term, it suggests speculating on ITD as profits could improve in the second half, while income has started to beat interest expenses. ITD will improve gradually in the long run but at a lower rate than its peers.

Tisco Securities recommends large-cap stocks in the SET50, namely BANPU, ROBINS, SCB and TPIPL, with SET100 recommendations identified as GUNKUL, LPN, PLANB, S, STEC, THCOM, BEM, CK, BTS and BTSGIF. For the second half, it AMA, BEAUTY, CK, JWD, ROJNA and SEAFCO.

TECHNICAL VIEW: DBS Vickers sees support at 1,620 and resistance at 1,650. Maybank Kim Eng Securities sees support at 1,620 and resistance at 1,650.