US-CHINA TRADE OPTIMISM BUOYS REGIONAL BOURSES
RECAP: Investor risk appetite revived yesterday in response to progress in US-China trade talks, with big gains across Southeast Asian bourses. Meanwhile, China’s securities regulator has set a timetable to remove foreign ownership limits on finance companies next year in a bid to attract overseas investment to bolster a slowing economy.
The SET index moved sideways in a range of 1,603.97 to 1,627.26 points before closing at 1,626.00, up 1.2% from the previous week, in turnover averaging 46.27 billion baht a day.
Institutional investors were net buyers at 3.3 billion baht and foreign investors bought 1.6 billion. Retail investors were net sellers of 2.97 billion baht and brokerage firms offloaded 1.97 billion baht worth of shares.
NEWSMAKERS: Britain’s Parliament will meet on Oct 19 after a crucial EU summit — seen as the last chance for the UK and EU to agree on a deal ahead of the Oct 31 deadline.
China is reported to be planning tighter visa restrictions for US nationals with ties to anti-China groups, following similar US restrictions on Chinese nationals, as relations between the countries sour. US President Donald Trump on Monday hailed a banner day for American farmers, announcing two trade agreements with Japan that he said would deepen economic ties in agriculture and digital commerce. He also said he would prefer to strike a comprehensive trade bargain with China.
Hong Kong’s under-fire leader Carrie Lam said on Tuesday she would not rule out accepting help from mainland China in tackling increasingly violent pro-democracy protests.
The Hong Kong Stock Exchange on Tuesday dropped its takeover bid for the London Stock Exchange Group. HSBC is planning to lay off up to 10,000 staff, just weeks after announcing the resignation of its chief executive and the cutting of 4,000 posts, citing a weak global outlook.
Samsung Electronics says it expects operating profits to drop more than 50% in the third quarter amid a continued slump in the global chip market.
The Thai government is considering forcing online giants such as Amazon. com and Facebook to collect value-added tax on e-commerce sales, echoing an Indonesian clampdown on transactions that skirt the levy. Deputy Prime Minister Anutin Charnvirakul says the CP Group and its partners in the three-airport rail link project must “play by the rules” after the consortium asked for the government to share more of the risk. The signing of the contract has been postponed to Oct 25 contract following the resignation of the entire State Railway of Thailand board.
The share price of newly SET-listed Asset World Corp Plc (AWC), a property arm of billionaire Charoen Sirivadhanabhakdi, edged up slightly during its first trading day on Thursday after the country’s biggest
IPO of an individual company.
B.Grimm Power plans to issue 6 billion baht in subordinated perpetual debentures in November to expand power plant operations domestically and abroad.
The IMF forecasts Thailand’s GDP growth will slow to 2.9% this year before improving marginally to 3% in 2020, while the Siam Commercial Bank Economic Intelligence Center sees growth of 2.8% this year and next.
The Bank of Thailand saw a need to preserve monetary policy space to address possible future risks when it kept its benchmark rate on hold last month, meeting minutes showed on Wednesday.
The central bank says it has been closely monitoring the market for both housing loans and speculative behaviour, and additional relaxation is not needed. Consumer confidence plunged to a 39-month low in September as the public fretted about the tepid economy, shrinking exports, low farm prices and global uncertainty stemming from trade wars and the Brexit impasse.
Thai commercial banks were rated fully compliant by the Financial Sector Assessment Programme, jointly conducted by the World Bank and the IMF, but the multilateral lenders pointed out that household debt needed to be reined in, while specialised financial institutions and cooperatives still needed to improve.
The Bank of Thailand insists that banks, under the new financial accounting standard, can extend fresh working capital loans to commercial loan defaulters who are undergoing debt restructuring without loan-loss provision requirements for the new loans.
The Trade Negotiations Department plans public hearings nationwide throughout October and November as it aims to revive long-delayed trade talks between Thailand and the EU.
Thailand should increase human capital investment to improve its global competitiveness index ranking after dropping to 40th place this year from 38th last year, says Asst Prof Wilert Puriwat, dean of Chulalongkorn Business School. Second and subsequent new mortgages, particularly for condo purchases, plunged 39% year-on-year in the three months to June after the central bank’s tougher loan-to-value regulations came into force in April.
The number of recipients for the second phase of the cash rebate for spending outside home provinces is expected to be limited to 5 million, says Finance Minister Uttama Savanayana.
Tourism from the Americas has shown growth, especially from Mexico, which has emerged as a promising source of tourists thanks to Thailand’s exemption from visa-on-arrival fees for Mexican visitors.
COMING UP: China will release September trade data on Monday. On Tuesday, the Reserve Bank of Australia will release its meeting minutes, China will announce September inflation, Britain will release September unemployment and Germany will release the October ZEW economic sentiment index. Britain and Canada will release September inflation figures on Wednesday, with the US announcing September retail sales the same day.
The European Council meeting will resume on Thursday and Australia will release September unemployment figures. On Friday, Japan will release September inflation and China will announce third-quarter GDP growth.
STOCKS TO WATCH: Tisco Securities suggests stocks shielded from the effects of the trade war, such as AOT, BTS, BEM, BDMS, CPALL and BJC. Recommended property funds and REITs are QHPF, CPNREIT and WHART. Monthly picks are BJC, ERW, SEAFCO, SPALI, TRUE, TU and WHA. Capital Nomura Securities suggests accumulating mid- and small-cap stocks of firms expected to report good third-quarter earnings such as JMART, STPI, ICHI, SPA and JMT. Consumer finance equities poised to gain from low interest rates are SAWAD, AMANAH and JMART. For high dividend yields, the firm recommends ADVANC, INTUCH and KKP.
TECHNICAL VIEW: Maybank Kim Eng Securities Thailand sees support at 1,615 points and resistance at 1,650. RHB Securities Thailand sees support at 1,580 and resistance at 1,670.