MIXED ECONOMIC SIGNALS KEEP ASIAN SHARES DRIFTING
Recap: Asian investors continued to tread cautiously last week amid mixed economic signals. Better-thanexpected US economic growth data and solid industrial output readings from China and Japan bolstered sentiment, but a hawkish view on interest rates by some US Federal Reserve governors and uncertainty about President Donald Trump’s tax reforms and spending plans after his healthcare fiasco pressured stocks. In Thailand a buying spree by foreign investors helped boost the index but profit-taking capped gains.
The SET index moved in a tight range of 1,568.48 and 1,584.73 points and closed at 1,575.11, up 0.1% from the previous week, in thin turnover averaging 39.3 billion baht a day. Foreign investors were net buyers of 13.9 billion baht. Retail investors cashed out 10.6 billion baht, institutional investors sold 2.76 billion and brokers sold 536 million.
Big movers: SET newcomer Synergetic Auto Performance (ASAP) jumped 43.2% above its IPO price of 3.03 baht on Thursday and closed the week up 39.3% at 4.22 baht. GL led in turnover, off 0.9% to 21.80 baht, PTT dipped 5.2% to 387 baht and CPF fell 6.7% to 27.75 baht. TSF led in volume and was the top loser, plunging 74.6% to 0.71 baht from 2.80 baht before the stock was suspended. Top gainer MOONG surged 55% to 8.15 baht.
Newsmakers: The US economy grew at a slightly faster rate in the fourth quarter than earlier estimates, as consumers ramped up spending. A final revision showed GDP rose 2.1% year-on-year, up from the previous estimate of 1.9%.
Two Federal Reserve policymakers, Eric Rosengren of Boston and John Williams of San Francisco, suggest three more interest-rate increases may be needed this year, instead of two as widely expected, to guard against overheating as the US economy approaches full employment and 2% inflation.
The White House hopes to see an overhaul of the US tax code passed by August and will take the lead in drafting the legislation following the embarrassing failure of a healthcare bill drafted by Republican legislators.
US consumer confidence rose to a 16-year high in March amid growing labour market optimism while the goods trade deficit narrowed sharply in February, indicating the economy was regaining momentum.
New claims for jobless benefits in the US edged down in the week to March 25, continuing a record streak. Claims have remained below 300,000 for more than two years, a streak not recorded since 1970.
China’s official factory gauge climbed to the highest in almost five years, the latest evidence of increasing momentum. The manufacturing purchasing managers’ index increased to 51.8 in March from 51.7 on February.
Japanese industrial output rose 2% in February from the previous month, the biggest increase in eight months.
Britain formally launched the process of leaving the European Union. By triggering Article 50 of the bloc’s Lisbon Treaty, Prime Minister Theresa May began a two-year countdown to an exit in March 2019, with tough negotiations ahead on multiple fronts. The deadline can be extended only if all the other 27 EU countries agree.
Vietnam’s economy grew in the first quarter by just 5.1%, its slowest pace in three years, as production was weak in agriculture, mining and manufacturing, the General Statistics Office said.
The Bank of Thailand’s Monetary Policy Committee (MPC) raised its 2017 economic growth forecast to 3.4% from 3.2% predicted three months ago because of a stronger export outlook, while it kept its policy rate unchanged at 1.5%.
The Fiscal Policy Office (FPO) conservatively estimates that just 60% of the 163-billion-baht midyear budget will be drawn down in this fiscal year.
The Agricultural Land Reform Office (Alro) said that 17 wind farm projects located on Sor Por Kor land earmarked by the state for agricultural reform are legal and can continue as planned.
The Bank of Thailand will shave 80 billion baht from its short-dated bonds to be issued in April as means to curb baht speculation, said a central bank official.
Continued gains in the baht that are bringing it closer to 34 to the US dollar reflect persistent offshore fund inflows, largely to Thai bonds, prompted by a perception that the local currency is a safe haven, says Phatra Securities.
Krungthai Bank (KTB) says loan growth started to pick up significantly in March after weakness in the first two months, as hefty state investment prompts the private sector to draw loans for investment. The country’s second largest lender now expects that its 6% loan growth target for the year is reachable.
Liquidity-driven stock market rallies are coming to an end following the tapering of money printing at most major central banks, warns the Association of Securities Companies.
The Securities and Exchange Commission (SEC) plans a public hearing on a proposed amendment for IPO regulations concerning share allocation to issuers’ patrons and related persons, including a cap at 15% for shares offered to patrons.
Coming up this week: Thailand today will release inflation and consumer confidence data for March. The dental clinic operator Dental Corp Plc (D) will enter the MAI at an IPO price of 6 baht. Due the same day are the China Caixin manufacturing PMI and Japanese Tankan index.
US durable goods orders for January will be released on Thursday, followed by final euro zone GDP figures for 2016 on Friday.
Stocks to watch: Bualuang Securities is overweight on personal finance firms as they will benefit from the economic recovery and rising commodity prices. It expects total net profit of the sector will rise 27% in 2017. SAWAD and KTC are its top picks as they have been laggards.
UOB Kay Hian Securities (Thailand) notes that the softer US currency will cause fund flows into emerging markets in the short term, and it recommends food and beverage and transport (aviation and travel) sectors. Stocks expected to show good Q1 performance are BDMS, AOT, MINT, ERW and TASCO. High-growth stocks are TU, MAJOR and SQ, and turnaround stocks are MAJOR, SGP, SIMAT, JWD, TSR and TU.
Technical view: DBS Vickers Securities (Thailand) sees support at 1,570 with resistance at 1,600 points. KT Zmico Securities tips support at 1,550 with resistance at 1,600 points.