FUND EXODUS CONTINUES IN WORST WEEK OF YEAR FOR SET
RECAP: Emerging economies continued to experience heavy outflows from their stock markets, with the SET recording its worst weekly percentage loss of the year, in response to the most recent US interest-rate increase. Investors are also growing more concerned about the global impact of the trade war involving the US, the EU and China.
The SET index stayed below 1,700 points all week. It moved in a range of 1,629.26 and 1,695.44 points before closing at 1,634.98, down 4.1% from the previous week, in heavy turnover averaging 61.67 billion baht a day.
Foreign investors were net sellers of 13.8 billion baht, brokers sold 8.38 billion and institutions 367.95 million worth of shares. Retail investors were net buyers of 22.55 billion baht.
NEWSMAKERS: Overseas funds are pulling out of six major Asian emerging equity markets at a pace not seen since the global financial crisis of 2008 — withdrawing $19 billion from India, Indonesia, the Philippines, South Korea, Taiwan and Thailand so far this year, according to data compiled by Bloomberg. Foreign investors have been net sellers of 45.19 billion baht in Thai shares so far this month.
Stock markets plunged around the world in the wake of Donald Trump’s latest tariff threats to China. The Dow Jones fell 1.2% on Thursday after Asian and European markets fell sharply earlier. Mr Trump has threatened to put tariffs on another US$200 billion of Chinese goods as the trade war intensifies. Retaliatory tariffs on €2.8 billion worth of US goods came into force yesterday in the EU. Targets include bourbon whiskey, motorcycles and orange juice.
The Bank of England voted 6-3 to hold its interest rate at 0.5% but signalled an August rise is growing more likely.
Euro zone countries have agreed a longawaited debt-relief deal for Greece. The “historic” pact gives Athens more time to repay €96.9 billion in loans and extends a grace period when little or no interest will be charged.
Embezzlement and bribery with government money are among the charges that Malaysia is looking to bring against former prime minister Najib Razak following a revised investigation into the alleged looting of the state-run fund 1MDB, Prime Minister Mahathir Mohamad said.
The slumping US industrial giant General Electric will be booted from the 30-company Dow Jones Industrials index this week, replaced by the pharmacy chain Walgreens Boots Alliance, which will contribute “more meaningfully” to the index, S&P Dow Jones said.
The Bank of Thailand left its policy rate unchanged as expected, giving more weight to domestic factors and declaring that external stability remains strong enough to cushion against persistent capital outflows. It also upgraded its economic growth outlook to 4.4% for 2018 and 4.2% for 2019, up from 4.1% for both years.
The deepening trade spat between the US and China is unlikely to have a direct impact on Thai exports, insists Pimchanok Vonkorpon, director-general of the Commerce Ministry’s Trade Policy and Strategy Office. She foresees more demand for imports from Thailand. The Commerce Ministry will revise up its export growth target next month after outbound shipments grew for a 15th straight month in May. The US dollar value of exports rose by 11.4% year-on-year to $22.3 billion after a 12.3% jump in April.
The board of Thai Airways International appointed Ekniti Nitithanprapas, director-general of the Revenue Department, as its new chairman. He will replace Somchai Sujjapongse, former permanent secretary for finance, who left the civil service in April.
Total Access Communication (DTAC) has appointed Alexandra Reich as its new chief executive. Ms Reich, an Austrian national, currently serves as chief executive of Telenor Group’s Central Eastern Europe Cluster. Prior to joining Telenor in 2016 she was executive vice-president and head of mobile business for Swisscom Enterprise.
The PTT affiliate Global Power Synergy has signed a share purchase agreement to acquire a 69.11% stake in Glow Energy from Engie SA of France for almost 100 billion baht as it positions itself for the transition in Thailand’s power market.
PTT Exploration and Production has completed the acquisition of a 22.22% stake in the Bongkot field from Shell for $750 million (23.5 billion baht). The agreement was first struck in March.
Auto sales jumped 27.9% year-on-year to 84,965 units in May and 7.3%, according to the Federation of Thai Industries. The growth was largely due to the introduction of new models, growing consumer confidence and the recovering economy.
The Excise Department is imposing a tax on B20 biodiesel that is 82 satang lower than the B7 tax in a push to make the former’s retail price three baht per litre cheaper than the latter’s.
COMING UP: Germany will release the business climate for June on Monday, with the US releasing new home sales for May. US consumer confidence for June will be announced on Tuesday. The Bank of England financial stability report is due on Wednesday, along with US durable goods orders and trade figures for May.
The US will release final first-quarter GDP figures on Thursday. The EU will release business confidence for June, with Germany releasing June inflation and a first reading of July consumer confidence.
Japan will release May unemployment and June consumer confidence on Friday, while the US will announce personal income and spending for May. The EU will release June inflation data and Britain will announce Q1 GDP.
STOCKS TO WATCH: Asia Plus Securities recommends accumulating high-dividend stocks amid volatile market sentiment. Look for firms with a policy to pay dividends twice a year, low beta, and potential for upside gains such as LH, RATCH and SPALI.
Tisco Securities likes BBL, CPALL, PTT, IVL and LH for long-term growth potential as the global and domestic economic recoveries continue. Stocks benefitting from the World Cup are BJC, HMPRO and TRUE. However, given the current high volatility, the broker recommends holding 100% cash for now.
TECHNICAL VIEW: Bualuang Securities sees support at 1,630 points and resistance at 1,670. Maybank Kim Eng Securities Thailand sees support at 1,620 and resistance at 1,655.