WALL STREET ROUT ROCKS WORLD

RECAP: Stock markets worldwide were rattled this week as investors dumped equities in response to a plunge in US shares and fear of higher interest rates, with bond markets deemed safe havens. Thailand was not spared, but the country’s sound fundamentals helped the benchmark index rebound at the end of the week.

The SET index moved in a range of 1,673.59 and 1,728.24 points before closing yesterday at 1,696.16, down 1.4% from the previous week, in turnover averaging 56.31 billion baht a day.

Foreign investors were net sellers of 23 billion baht and brokerage firms sold 2.7 billion worth of shares. Retail investors were net buyers of 14.9 billion baht and institutions purchased 10.9 billion.

NEWSMAKERS: The International Monetary Fund has warned that a trade war between the US and China risks making the world a “poorer and more dangerous place”. It has reduced its 2018 and 2019 global economic growth forecasts to 3.7% from 3.9% earlier.

China will cut the amount of cash banks must hold in reserve as part of efforts to support the economy amid trade friction with the US. The move will result in 750 billion yuan (US$109 billion) in cash injected into the financial system.

Britain would be welcomed into the Trans-Pacific Partnership trade deal with “open arms” after it leaves the EU, Japanese Prime Minister Shinzo Abe has said. Meanwhile, the UK government expects thousands of financial services jobs will have moved to the continent the time the UK exits the bloc in March.

The euro zone economy continued its slow-motion slowdown in September, as exports suffered from a drop in global demand and uncertainty about future trade relations between the US and other countries.

Malaysian Finance Minister Lim Guan Eng said Tuesday the government plans new taxes to help raise funds to pay off debts that snowballed due to corruption under the previous government.

Google on Tuesday appealed the record €4.34 billion (US$5 billion) anti-trust fine imposed by the EU for abusing the dominance of its operating system for mobile devices.

HSBC has reached a $765-million settlement in the US over its sale of mortgage-based securities during the run-up to the 2008 financial crisis. The deal resolves claims by the US that HSBC misled buyers about the quality of the securities.

SET-listed banks are expected to announce lower quarter-on-quarter net profit for the third quarter but higher year-on-year earnings, say analysts, noting the waiver of transaction fees for digital banking dealt a blow to fee-based income.

Foreign funds continue to move into Thailand’s bond market because the country represents a safe haven amid the sell-off in emerging-market bonds and equities, says the Thai Bond

Market Association.

The Federation of Thai Capital Market Organizations is conducting a feasibility study on an “exit strategy” to mitigate possible investment outflows if the Finance Ministry does not extend the tax deductions for long-term equity fund (LTF) investments next year.

The Federation of Thai Industries wants the government to speed up measures to protect local steelmakers as Chinese dumping has become a serious problem. China has introduced a new tax rebate structure for 397 exports, including 85 steel items including cold-rolled plate, colour-coated steel, steel pipe, nails and scaffolding.

Thai sugar millers are teaming up with the Global Sugar Alliance to file complaints with the World Trade Organization to seek the abolition of India’s sugarcane farmer subsidy.

The Commerce Ministry is studying the use of public blockchain records for copyright management, with plans to expand to agriculture and trade finance to lift national competitiveness and credibility, particularly for small business.

The long-awaited Thailand Future Fund launched its IPO on Friday, offering retail investors between 4 billion and 4.47 billion investment units at a price of 10 baht each. The Energy Regulatory Commission has blocked Global Power Synergy Plc (GPSC), PTT’s power-generating arm, from taking over Glow Energy Plc, in a move that collapses this year’s biggest investment deal. Directors of embattled SET-listed Inter Far East Energy Plc (IFEC) have sent letters to the company’s 50 non-listed subsidiaries, intending to set up an urgent shareholders’ meeting in order to remove former IFEC controversial directors and executives from exercising their power.

Ford Motor Co remains silent on whether its Asean operations will be affected by a US$11-billion restructuring plan to cut 70,000 salaried employees worldwide. Thai Credit Retail Bank aims for 15% growth to 52 billion baht in its loans outstanding this year based on strong demand for microfinance, said chief executive Winyou Chaiyawan.

Advanced Info Service Plc (AIS) and True Move told the SET they would not participate in the 900-megahertz spectrum licence auction planned by the National Broadcasting and Telecommunications Commission for Oct 20. Third-ranked mobile operator DTAC is still deciding what to do.

The Thai-Japanese joint venture FOMM Asia Co is the first carmaker under the government’s electric vehicle (EV) scheme to win Board of Investment incentives for manufacturing battery EVs, as others have joined hybrid and plug-in hybrid EV schemes.

COMING UP: The US will release September retail sales data on Monday. On Tuesday, New Zealand and China will release September inflation, Britain will update unemployment data and Germany will release the ZEW economic sentiment index for October. Britain will release September inflation on Wednesday, and minutes of the last Fed meeting will be released in Washington the same day. Due Thursday are Japanese trade figures and Australian unemployment for September. On Friday, Japan and Canada will release September inflation data, while China will announce September GDP growth and the US will release September existing home sales.

STOCKS TO WATCH:

Capital Nomura Securities recommends that investors hold 75% of their portfolio in stocks, 7.5% in cash, 12.5% in gold and the rest in bonds. Recommended domestic plays are STEC, GUNKUL and PYLON. The Thailand Future Fund IPO that runs until Oct 19 will provide a lift for AMATA, WHA, CK and PYLON. GULF and TOA, meanwhile, are candidates for the influential MSCI index. Krungsri Securities recommends stocks expected to gain from yearend growth momentum, among them IHL, BCH, KCE, SVI and CKP.

TECHNICAL VIEW: Capital Nomura Securities sees support at 1,664 points and resistance at 1,750. Krungsri Securities sees support at 1,680 and resistance at 1,720.