TRADE JITTERS SET TONE AGAIN

RECAP: Fear of an escalating trade dispute between the US and China has returned now that Beijing has vowed to retaliate if Washington imposes new penalties. The dollar continues to rise and the yuan is moving in the opposite direction, keeping markets on edge.

The SET index moved in a range of 1,695.59 and 1,722.72 points before closing on Friday at 1,712.09, up 0.6% from the previous week, in moderate turnover averaging 54.74 billion baht a day over four trading days.

Retail investors were net sellers of 4.52 billion baht and institutional investors sold 1.13 billion baht worth of shares. Foreign investors were net buyers of 3.88 billion baht and brokers’ net purchases totalled 1.77 billion.

NEWSMAKERS: The US is now considering 25% tariffs on US$200 billion worth of Chinese goods, much higher than the 10% it threatened previously, the Office of the US Trade Representative confirmed on Wednesday. China’s foreign minister said that in a globalised world, such over-the-top penalties would hurt US consumers and businesses more than anyone else.

The possibility of a no-deal Brexit is “uncomfortably high” and “highly undesirable”, said Bank of England governor Mark Carney after the central bank raised its interest rate for only the second time in a decade. The new benchmark rate, up 25 basis points to 0.75%, is the highest since March 2009.

Chinese factory activity slowed in July, missing forecasts as extreme weather and the trade war with the US weighed on manufacturing. The Purchasing Managers’ Index (PMI) declined to 51.2 from 51.5 in June. Malaysia may consider restrictions on foreign car imports to protect the country’s “infant industry”, Prime Minister Mahathir Mohamad said on Monday. He brought Proton into being 35 years ago in his previous incarnation as PM, but the company has struggled in the market for most of its existence. Perodua, however, has fared better. Apple has become the world’s first public company to be worth US$1 trillion. The iPhone maker reached the milestone on Thursday when its shares closed at a record high of $207.39 in New York.

Huawei of China says it could replace Samsung as the world’s top smartphone maker by late next year, just days after data showed it had moved into second place ahead of Apple, despite being essentially barred from the key US market. Cyber-attackers stole the data of 123,000 customers of Kasikornbank and Krungthai Bank in what appears to be the first massive data leak at local financial institutions. The pair told the Bank of Thailand late last week about the leakage of their customers’ non-financial data. No customers have reported financial losses so far. Kasikornbank (KBank) says it will maintain its full-year new mortgage lending growth target of 6-8%, even though expansion in the first half was more modest. Amid fierce competition in the local pickup truck market, Tata Motors of India has decided to stop local assembly in the current financial year ending in March. Delta Electronics International Singapore Pte Ltd (DEISG) has made a conditional voluntary tender offer for all ordinary shares of SET-listed Delta Electronics Thailand Plc worth 88.6 billion baht. The offer is for 1,247,381,614 ordinary shares at 71 baht each.

Global Green Chemicals Plc (GGC), the SET-listed biochemical arm of PTT Global Chemical Plc (PTTGC), says its investigation showed that “misconduct among certain suppliers and some employees” led to an inventory shortfall that cost up to 2.1 billion baht. “GGC delivered the raw materials to the suppliers for refining; however, they neither returned the refined products as required under contract nor the raw materials to GGC.”

SET-listed developer Quality Houses Plc (QH) has postponed the launch of three condominium projects previously planned for 2018 to next year, due to an oversupply and high land prices.

The global economy is likely headed for a recession in 2020 and the economic downturn will accelerate if the China-US trade squabble turns into a full-blown trade war, says Supavud Saicheua, an adviser to Kiatnakin Phatra Financial Group.

Thailand’s second-quarter economic growth probably outpaced the 4.8% rate in the first quarter, propelled by robust exports and stronger domestic investment and consumption, said Pornpen Sodsrichai, director of the Economic Analysis Office at the Bank of Thailand. Official figures will be released later this month.

The manufacturing production index (MPI) in June rose 4.7% year-on-year to 115.9, helped by higher production of cars, engines, sugar, air-conditioners, plastics and electronic parts, according to the Office of Industrial Economics. Headline inflation picked up to 1.46% year-onyear in July after easing to 1.38% in June.

Consumer sentiment rose to its highest level in 62 months in July, boosted by broader-based economic growth. The University of the Thai Chamber of Commerce said its consumer confidence index in July rose to 82.2 from 81.3 in June and 80.1 in May.

Life assurance businesses reported 5% growth in total premiums for the first half, driven mainly by bancassurance and insurance agents, says the Thai Life Assurance Association.

COMING UP: Indonesia will release second-quarter GDP data on Monday. The Reserve Bank of Australia will hold a policy meeting on Tuesday and Germany will release June trade figures the same day. China will release July trade figures on Wednesday, followed by July inflation figures on Thursday. National Australia Bank will announce the July business confidence index on Wednesday. On Friday, China will release new yuan loans for July and Japan will announce preliminary second-quarter GDP data. Britain will release June trade figures and the US will announce July inflation data.

STOCKS TO WATCH: Bualuang Securities (BLS) sees limited upside for the SET next week. The banking sector and some large-cap stocks, such as SCC, SCCC and PTTEP have already reported Q2 earnings, but net profits at some were similar or unchanged from the same period a year earlier.

BLS recommends selective buying in state enterprise stocks offering high dividend payments such as TOP and PTTGC. It also likes the building and material sectors, with SCC, SCCC, TPIPL, HMPRO, GLOBAL and TOA the top picks.

Asia Plus Securities believes the SET index will continue to fluctuate and may fall below 1,700 points depending on how serious the US-China trade war gets. It recommends domestic plays in healthcare, banking and commerce. Its recommendations are BJC, BH, DTAC, EASTW, BBL, CPF, BB, BH and ROBINS.

TECHNICAL VIEW: Tisco Securities sees support at 1,690 points and resistance at 1,725. DBS Vickers Securities Thailand sees support at 1,680 and resistance at 1,730.