TRADE FEARS HIT GLOBAL SHARES BUT SET STAYS ABOVE 1,600
RECAP: The global trade war remains as an agonising concern among capital markets worldwide as retaliatory tariffs between the US and China took effect on Friday. Flagging investor sentiment is reflected in continuous volatility, with heavy foreign sell-offs seen in emerging markets.
The SET index moved in a range of 1,586.34 and 1,632.42 points and closed yesterday at 1,614.76, up 1.2% from the previous week, in moderate turnover averaging 57.27 billion baht a day.
Foreign investors were net sellers of 10.53 billion baht, while brokerage firms sold 1.64 billion and retail investors 1.54 billion worth of shares. Institutional investors were net buyers of 13.70 billion baht.
NEWSMAKERS: US tariffs of 25% on US$34 billion worth of Chinese goods officially came into effect yesterday, signalling the start of a trade war between the world’s two largest economies. Beijing retaliated immediately by imposing a similar 25% tariff on 545 US imports worth a total of $34 billion.
The EU has warned Washington that a threat to slap Europe with major tariffs on automobiles could inflict serious damage ono the US economy and prompt strong retaliation. The Trump administration says it does not want the world’s biggest phone company, China Mobile, to provide telecom services within the US, citing national security concerns. State-owned China Mobile first applied to the US Federal Communications Commission for a licence in 2011.
Former Malaysian prime minister Najib Razak was arrested and formally charged with corruption on Wednesday. Mr Najib is accused of pocketing US$700 million from the state development fund 1MDB. Billions of dollars are still unaccounted for from the fund, set up by Mr Najib.
The co-founder and chairman of the financially troubled Chinese conglomerate HNA Group died in an accidental fall while on a business trip in France, the company said. Wang Jian, 57, fell off a wall in the village of Bonnieux in Provence on Tuesday as he was having his picture taken, police said.
The SET suffered a steep plunge on Thursday amid another heavy sell-off triggered by fears of a China-US trade war. Uncertainty over the second-quarter financial performance of listed companies and oil prices added to the pessimism. Shares staged a modest rally yesterday on bargain-hunting.
Despite the significant stock market correction, foreign fund outflows are expected to subside and reverse to net purchases this month as negative factors have been accounted for, says Asia Plus Securities. Foreign net sales of local equities have begun to slow down, and there was even some net buying in early July, said senior executive vice-president Poranee Thongyen.
Bank of Thailand governor Veerathai Santiprabhob warns that the baht will remain highly volatile in the foreseeable future, prompted by tightened monetary policy in advanced economies and trade conflicts among major economies.
Although the yield curve for Thai government bonds is lower than for their US counterparts, they have a higher investment return because Thailand’s real interest rate is higher than the two- and 10-year US Treasury yields, says the Thai Bond Market Association.
A higher ratio of new mortgages with loanto-value rates exceeding 90%, the increasing loan-to-income proportion and deteriorating bad mortgage rates all point to residential property market fragility, the Bank of Thailand has cautioned.
The Thai government is tightening inspection measures to prevent possible transshipment of Chinese steel and aluminium products to the US via Thailand to avoid tariffs, following complaints from Washington.
The Commerce Ministry has revised its inflation forecast upward by 0.1 points to a range of to 0.8% to 1.6% for the year after headline consumer prices rose for a 12th straight month in June.
Consumer sentiment rose to its highest in six months in June, as Thais became less concerned about oil prices. Sentiment were also boosted by higher exports and growing tourism and recovering farm product prices. The cabinet approved the extension of the 7% value-added tax (VAT) rate for a 20th consecutive year until Sept 30, 2019 to maintain economic stability.
The Finance Ministry has borrowed 3.4 billion baht from the Asian Development Bank (ADB) to build two four-lane roads in the Northeast, marking the country’s first borrowing from the Manila-based development lender in almost a decade.
The SEC has released a regulatory framework for issuing and selling digital tokens through initial coin offerings (ICOs) along with announcing the ICO portal process, effective from July 16.
Shares of the SET-listed cosmetics company Beauty Community (BEAUTY) have plunged 30% as investors are losing confidence in its sales and revenue growth prospects amid broader concerns about the cosmetics industry in light of recent product-safety scandals.
COMING UP: China will release June foreign direct investment data tomorrow and Germany will release trade figures on Monday.
On Tuesday, China will release data on consumer prices and new yuan loans, Britain will announce May GDP and trade figures, and the EU will release the ZEW business sentiment survey for July.
The Bank of Canada will review its policy rate on Wednesday, and the European Central Bank will hold a non-monetary policy meeting the same day.