ASIAN SHARES ON COURSE FOR THIRD WEEK OF GAINS

RECAP: Asian stocks rose yesterday, on course for a third week of gains, while the dollar was steady as fresh signs of an easing US labour market stoked optimism about interest rate cuts before the year is out.

The SET index moved in a range of 1,365.92 and 1,384.74 points this week, before closing yesterday at 1,371.90, up 0.1% from the previous week, with daily turnover averaging 38.83 billion baht.

Brokerage firms were net buyers of 727.21 million baht, followed by institutional investors at 559.61 million. Foreign investors were net sellers of 980.97 million baht, followed by retail investors at 305.85 million.

NEWSMAKERS: Solid Chinese trade data added to signs that demand in the world’s second-largest economy is picking up. Exports in April grew 1.5% year-on-year after a 7.5% decline in March. Imports increased 8.4%, reversing a 1.9% fall in March. US President Joe Biden’s administration is poised to release a sweeping decision on China tariffs as soon as next week. It is expected to target key strategic sectors while rejecting the across-the-board hikes sought by rival contender Donald Trump, people familiar with the matter said. Chinese people made nearly 8.47 million inbound and outbound trips during the Labour Day holiday (May 1-5), up 35.1% from a year earlier, signalling a recovery in consumption.

The Bank of England on Thursday held its interest rate unchanged at 5.25% as expected, but warned a June rate cut was not a done deal. “We need to see more evidence that inflation will stay low,” governor Andrew Bailey said.

The European Central Bank won’t commit to what will happen beyond its planned June rate cut, according to vice-president Luis de Guindos. With the economy having endured a mild recession late last year, some want the central bank to help support a recovery.

US jobless benefit claims rose to the highest level since last August, in a further sign of a softening labour market. Nonfarm payrolls in April grew by 175,000, lower than expected, bolstering hopes the Federal Reserve could start lowering rates as early as September.

Bank of America estimates US core inflation in April slowed to 0.28% month-on-month, down from an average of 0.37% in the first quarter but still higher than the Fed would like. Official figures will be released next week.

TikTok and its Chinese owner ByteDance have sued the US government, seeking to block a law that could lead to a ban on the popular short-form video-sharing platform if ByteDance does not sell its US operation.

Toyota Motor on Wednesday reported a record net profit of ¥4.94 trillion ($31.9 billion) in the year to March 31 on revenue of ¥45.1 trillion, double the previous year’s total, on the back of a weak yen and strong demand for hybrid vehicles.

Nissan said net profit rose 92% to ¥426.6 billion ($2.7 billion) on rising demand at home and abroad. But it forecast the figure would moderate to ¥380 billion in the 2024-25 financial year.

Honda Motor also reported a record profit but issued a cautious outlook for the current fiscal year. Net profit to March 31 soared 70% to ¥1.1 trillion ($7.1 billion) on sales of ¥20.4 trillion, up 20.8%.

Tesla sold 62,167 Chinese-made electric vehicles (EV) in the mainland in April, down 18% year-on-year, while BYD sales rose 49% to 312,048 units.

Bank of Japan board members turned overwhelmingly hawkish at their April policy meeting, with minutes showing many calling for raising rates steadily to forestall risks of inflation overshooting its target.

Bitcoin fell below $61,000 on Thursday, a fifth straight day of declines.

The crypto market has shed 17% to $2.4 trillion since Bitcoin’s mid

March record of $73,798. Amazon.com plans to spend S$12 billion ($8.9 billion) over the next four years to expand its cloud computing infrastructure in Singapore, Amazon Web Services (AWS) said this week. Chinese and Hong Kong stocks offer the best investment opportunities for substantial returns, while artificial intelligence (AI) is set to change the investment landscape by effectively managing portfolios, says Jitta Wealth Asset Management.

The Ministry of Finance says the Thai economy has problems, as seen in the steady decline in annual GDP growth from a peak of 5% in the mid-1990s to only 2%, moving in the opposite direction to other countries in the region. Most are experiencing higher growth rates, especially in exports.

The ministry also warned that the digital wallet stimulus could increase the government’s debt service-to-revenue ratio from the current 8% to 11% next year, potentially leading credit rating agencies to downgrade Thailand’s rating from A to BBB+.

Singapore-based United Overseas Bank is preparing to downgrade Thailand’s GDP growth forecast this year to 2.4% from 2.8%, though it expects the Bank of Thailand to trim interest rates twice to 2% by year-end to prop up the economy. Thai Union Group reported a net profit of 1.2 billion baht in the first quarter of 2024, a 53.9% increase from the same period last year.

The Thai National Shippers’ Council is confident exports will grow by 1-2% this year, but cautioned that a planned hike in the daily minimum wage to 400 baht in October must be considered thoroughly, with supportive government measures provided.

The Thai Chamber of Commerce and over 50 trade associations oppose the government’s plan to raise the minimum wage to 400 baht a day nationwide, saying it will hurt the economy and competitiveness. The Thai drinks maker General Beverage Co Ltd is planning a Singapore initial public offering for a unit that distributes its brands including IF coconut water overseas, informed sources told Bloomberg. About 1 million credit card accounts were non-performing in the first quarter, according to the National Credit Bureau. Payments were overdue on 200,000 more accounts, up 32% from a year earlier, after the minimum payment was raised to 8% from 5% on Jan 1.

The Federation of Thai Capital Market Organizations (Fetco) said its investor confidence index remained steady for the third straight month, with hopes pinned on economic stimulus and recovery.

A total of 12.6 million foreign tourists visited Thailand from Jan 1 to May 5, generating 600 billion baht in revenue, the Ministry of Tourism and Sports reported.

New Finance Minister Pichai Chunhavajira says he plans talks with Bank of Thailand governor Sethaput Suthiwartnarueput in a bid to ensure fiscal and monetary policies are aligned, after weeks of public debate over interest rates.

The Board of Investment (BoI) says 18 major global AI and data centre companies have proposed projects with a combined investment value exceeding 80 billion baht.

COMING UP: On Monday, the EU will release updated economic forecasts. Tuesday will bring German inflation, Opec’s monthly oil market report and US producer prices. On Wednesday, the US will report April consumer inflation, retail sales and updated crude oil inventories, and Japan will release first-quarter GDP.

On Thursday, the US will update jobless claims and housing starts. China will report yearly fixed-asset investment and an updated unemployment rate. Friday brings euro zone inflation and Japanese industrial production data.

Locally, Tuesday is the last date for listed companies to submit first-quarter statements.

STOCKS TO WATCH: Globlex Securities recommends stocks that benefited from exports in March when shipments were growing, including STA, NER, TRUBB, TEGH, XO, ITC and AAI. Possible beneficiaries of Microsoft’s investment in a data centre in Thailand are INSET, SYMC, INET, ITEL and TKC.

InnovestX Securities recommends selective buys based on four themes. First is stocks for which Q1 profit is expected to grow while prices have not increased much, namely AOT, ERW, MINT, KCE and OPS. It recommends caution on power plants, which risk forex loss given the weakened baht.

The second theme is defensive stocks for which results do not fluctuate much. It includes healthcare (BDMS), land transport (BEM), commerce (CPALL and CPAXT), telecoms (ADVANC) and high-dividend property plays (AP).

For those with high risk appetite, mid- and small-caps expected to report good Q1 and Q2 results include ONEE, SNNP, THRE and TIDLOR. Finally, oil stocks, in particular PTTEP, can help hedge risks from Mideast tension.

TECHNICAL VIEW: Globlex Securities sees support at 1,350 points and resistance at 1,420. Kasikorn Securities sees support at 1,330 and resistance at 1,400.