OIL PRICE SURGE RATTLES EQUITY TRADERS, SET RETREATS

RECAP: Financial markets remain on edge over geopolitical risks in the Middle East, which could drive surging oil prices even higher. US Treasury yields at a seven-year high, meanwhile, are stoking expectations that the Federal Reserve could raise its interest rate more than four times this year.

The SET index moved last week in a range of 1,745.45 and 1,774.82 points before closing at 1,754.17, down 0.6% from the previous week, in heavy turnover averaging 61.41 billion baht a day.

Foreign investors were net sellers of 6.54 billion baht worth of Thai shares. Institutional investors were net buyers of 3.27 billion baht, with brokerage firms buying 1.50 billion and retail investors 1.77 billion.

NEWSMAKERS: The Trump administration is hopeful that its summit with North Korea will go ahead, despite threats of cancellation. After lashing out earlier at South Korea and calling off further talks with Seoul, said it might pull out of the Singapore meeting on June 12 if the US insists that it give up its nuclear weapons unilaterally. China has welcomed a pledge from US President Donald Trump to help save ZTE, one of China’s biggest telecoms companies. The firm has suspended operations after the US last month banned American companies from selling it components. ZTE had admitted to making illegal shipments to Iran and North Korea. Mr Trump subsequently discovered that a lot of American jobs depend on ZTE. Japan’s economy shrank in the first quarter of 2018 for the first time in two years, ending the longest stretch of economic growth since the 1980s. GDP contracted at an annualised rate of 0.6%.

The French energy giant Total is preparing to pull out of a $1-billion gas project in Iran in the face of renewed US sanctions now that Washington has walked away from the Iran nuclear accord. Total said it would unwind operations by November unless sanctions are waived.

The World Trade Organization has ruled that the European Union failed to comply with requests to end subsidies for Airbus. The US Trade Representative (USTR) said the ruling opens the way for placing tariffs on EU goods. The USTR argued that European countries had given $22 billion in state aid to Airbus to help launch its A380 and A350 jets, causing losses to US rival Boeing.

A royal decree to regulate digital asset-related transactions came into force on Monday. It gives Securities and Exchange Commission (SEC) authority to control and regulate the sector. All sellers are required to register with the SEC within 90 days of the effective date. The SEC will also prohibit new initial coin offerings during the public hearing process to draft the organic law on regulating digital assets.

The long-awaited Eastern Economic Corridor (EEC) Act took effect on Tuesday and consists of 73 sections defining policy in the corridor, with plans to utilise land plots for sustainable development and integrate related infrastructure and utilities to connect all areas, both inside and outside the corridor.

Five petroleum exploration and production (E&P) giants confirmed their participation in this year’s auction of the Erawan and Bongkot gas blocks in the Gulf of Thailand by submitting documents to the Mineral Fuels Department this week. They include three existing operators — Chevron, PTTEP and Total — and two newcomers: Mubadala and OMV. Consideration of two coal-fired power plants in two southern provinces is back on track after a four-year delay, say energy policymakers. The plan has been postponed several times because of widespread opposition from communities and environmentalists. A new attempt to conduct hearings over five months has been launched.

The Bank of Thailand left its policy rate unchanged at 1.5% this week, saying it was in no rush to match the global tightening after some counterparts in Southeast Asia raised rates in line with moves by the US Federal Reserve.

AirAsia Group has confirmed it will invest US$150 million (4.8 billion baht) in a maintenance, repair and overhaul (MRO) facility at U-tapao airport.

Pace Development said its net loss widened by 610% year-on-year in the first quarter, due to impairment from investments and increased selling expenses from its highend property business.

COMING UP: Japan will release April trade figures on Monday. France will release Q1 unemployment data on Wednesday and Germany will update the manufacturing purchasing managers’ index for May. Due the same day are UK inflation for April, EU consumer confidence and US new home sales for April.

The US Federal Reserve on Thursday will release the minutes of its most recent meeting. The EU will release an OECD economic forecast on Friday, the UK will release a second estimate of first-quarter GDP, and the US will announce durable goods orders for April.

STOCKS TO WATCH: Tisco Securities recommends stocks profiting from the Eastern Economic Corridor law, including CK, UNIQ, SEAFCO, PILON, AMATA, ROJNA and WHA. Stocks expected to benefit from the weaker baht are HANA, SKN and VTO, while World Cup beneficiaries will be BJC, HMPRO and TRUE.

Capital Nomura Securities (CNS) suggests asset allocation of 70% in styocks, 12.5% each in cash and gold, and 5% in bonds. Its top stock picks are AMATA, WHA, IVL, TOA, GLOBAL and ROBINS.

TECHNICAL VIEW: CNS sees support at 1,737 points and resistance at 1,765. DBS Vickers Securities Thailand sees support at 1,730 and resistance at 1,775.