RECAP: Asian equities were poised for weekly gains on Friday as soft US labour market data buoyed expectations of interest rate cuts by the Federal Reserve later this year. Most regional currencies also inched higher versus a weaker dollar.
Thai shares bounced back during the week after falling below 1,300 points again on July 1, boosted by energy stocks as oil prices rose sharply, and big-cap banks ahead of second-quarter earnings.
The SET index moved in a range of 1,286.79 and 1,312.75 points this week, before closing yesterday at 1,311.99, up 0.8% from the previous week, with daily turnover averaging 32.13 billion baht.
Institutional investors were net buyers of 2.5 billion baht, followed by retail investors at 1.1 billion. Foreign investors were net sellers of 2.5 billion baht, followed by brokerage firms at 1.08 billion.
NEWSMAKERS: Domestic-focused stocks surged in London yesterday after the Labour Party scored a landslide election victory, easing the concerns of investors who expect it to end years of volatility. Labour won 410 of the 650 seats in the House of Commons, while the Conservatives were on course for their worst-ever performance with 117.
Minutes from The Fed’s June meeting showed officials did not want to lower interest rates “until additional information had emerged to give them greater confidence that inflation” is on track to reach their 2% goal.
Fed chairman Jerome Powell said this week that the central bank had “made quite a bit of progress” in cooling price increases, but wants to have more confidence that inflation is really under control.
US headline personal consumption expenditure (PCE), the Fed’s preferred gauge of inflation, was 2.6% in May. Factory orders fell, contrary to expectations, while the services purchasing managers’ index (PMI) for June fell to a four-year low. The weak figures suggest the Fed could cut rates at its September meeting.
US job growth is estimated to have slowed to a still-healthy pace in June, with the unemployment rate holding steady at 4%, increasing the chances that the Fed will be able to tame inflation without tipping the economy into recession.
The European Union on Thursday slapped extra provisional duties of up to 38% on Chinese electric car imports because of Beijing’s “unfair” support, a move that risks escalating tensions with Beijing.
Amazon.com founder Jeff Bezos disclosed a plan to unload 25 million additional shares worth $5 billion on a day that shares of the e-commerce giant hit a fresh record. Bezos earlier sold shares worth $8.5 billion over nine trading days in February.
Hyundai Motor Group and LG Energy Solution of South Korea have opened Indonesia’s first battery production plant for electric vehicles with an annual capacity of 10 Gigawatt hours (GWh) of cells. The pair plan to invest up to $9.8 billion in Indonesia to develop an EV supply chain.
Tesla said it delivered 443,956 vehicles in the second quarter, slightly better than analysts’ forecasts. While sales were down 4.8% year-on-year, they improved from 386,810 in the first quarter.
General Motors reported second-quarter sales rose to 696,000 units, the highest since the fourth quarter of 2020, driven by demand for EVs and pickups.
China’s manufacturing sector grew in June at the fastest pace since May 2021, with the Caixin PMI coming in at 51.8, on strong production and stabilising employment, look, a survey showed on Monday.
Japan’s household spending in May dropped 1.8% from a year earlier, the first decline in two months, as rising prices prompted people to cut back on food outlays and a weak yen discouraged travel abroad.
Japan’s economy contracted by an annualised 2.9% in the first quarter, revised data showed. The business sentiment index for major Japanese manufacturers rose two points to 13 in June, marking the first improvement in two quarters.
A unit of the Chinese conglomerate Fosun International is planning to sell a ski resort with three hotels in the northern Japanese prefecture of Hokkaido, as Fosun continues to divest assets to ease its 211.9-billion-yuan ($29.9 billion) debt load.
Bank of Thailand governor Sethaput Suthiwartnarueput said on Thursday that the country’s economic growth potential is expected to hover around 3% for the next five years, a decline from close to 3.5% seen in the years before the Covid pandemic.
The headline consumer price index (CPI) rose 0.62% in June from a year earlier, easing from 1.54% in May, the Ministry of Commerce said.
The manufacturing production index for May contracted 1.54%, bringing the five-month contraction to 2.08%, reflecting weak domestic purchasing power, high household debt and interest rates.
The Ministry of Finance expects to finalise plans for a new Vayupak Fund within two months, considering either establishing a third fund or injecting capital into existing investment funds.
An uptick rule took effect on the Stock Exchange of Thailand on July 1, resulting in a drop in the value of short sales to 1.19 billion baht a day from the June average of 6.95 billion per day.
The EV maker BYD on Wednesday officially opened its first factory outside China, at the WHA Industrial Estate in Rayong, with the potential to create 10,000 jobs. The 35-billion-baht plant has a capacity of 150,000 cars per year.
The opening of the BYD factory was almost overshadowed by consumer anger at company dealers over deep discounting. The Consumer Protection Board said it had received 70 complaints from buyers who said dealers told them to act fast before a discount campaign ended, only to find that prices were cut even further after they purchased their cars.
Thailand’s rapidly expanding EV market could suffer if insurers refuse to provide coverage because of high parts costs and claim values, says the Thai Automotive Industry Association. Tokio Marine Safety Insurance, the country’s second-largest auto insurer, announced on Tuesday that it would now consider premium rates for EVs on a case-by-case basis.
The World Bank has urged the Thai government to beef up investment in ageing infrastructure and strengthen the green economy to improve the country’s economic potential beyond 2.7% in the medium term. It forecasts the economy will grow by 2.4% this year and 2.8% next.
The government is accepting advance registrations via its Tang Rat super-app for the 10,000-baht digital wallet handout programme set to begin in the fourth quarter, Deputy Finance Minister Julapun Amornvivat said.
Average fuel consumption in the first five months of 2024 was 157.1 million litres a day, down 0.4% year on year, according to the Department of Energy Business. The decrease reflected reductions in fuel oil (21.6%), NGV (16.6%) and gasoline (1.0%).
The Thai Bond Market Association reported three bond defaults in the first half totalling 1.1 billion baht, with nine cases totalling 18.8 billion baht receiving payment extensions. In second half, 440 billion baht in bonds will mature.
The Ministry of Energy plans to review the new Power Development Plan, which proposes reducing state-owned Egat’s share of electricity generation from 29% to 17% by 2037.
The Board of Investment (BoI) reports that 37 data centre and cloud service projects valued at 97.6 billion baht have been approved for investment promotion.
COMING UP: On Monday, Germany will release trade figures, the US will report consumer credit and the UK will update retail sales. On Tuesday, Fed chairman Jerome Powell testifies before the US Senate banking committee, the Reserve Bank of New Zealand holds a rate meeting, and China reports consumer and producer prices.
On Wednesday, Russia reports inflation and Opec releases its monthly oil outlook report. On Thursday, the UK reports GDP, Germany and the US release inflation data.
Locally, the SET will release June trading figures and market outlook on Tuesday.
STOCKS TO WATCH: Asia Plus Securities said SET50 stocks are attracting more interest from foreign investors. Among them are BJC, OSP, SCGP, IVL, AWC, TRUE, AOT, GPSC, HMPRO, CPF, GLOBAL, CBG, ITC, PTTGC and DELTA, which have outperformed the market in the first half.
Globlex Securities has a neutral investment weighting on banking stocks, recommending buys for BBL, KBANK, KTB and TTB, and a hold for for TISCO for dividends received. Banks whose loan balances have risen this year include CREDIT (3.4%), CIMBT (2.7%), SCB (1%), BBL (0.8%), TISCO (0.5%) and KTB (0.3%). Decreases have been seen at BAY (-2.1%), KKP (-1 8%), TTB (-1.6%), KBANK (-1.4%) and LHFG (0.6%).
Bloomberg Consensus expects year-on-year profit increases from KBANK (8%), KTB (5%) and TTB (17%). Decreases are expected from BBL (-8%), KKP (-20%) and SCB (-12%).
InnovestX Securities recommends stocks benefiting from short-covering now that the uptick rule is in effect, and that have SETESG ratings of AAA to A–, namely HANA, TOP, BEM, MINT, OSP, BBL, SCGP and AOT. Expected beneficiaries of rule changes that make ThaiESG funds more attractive include ADVANC, CPALL, BDMS, BBL and BEM.
TECHNICAL VIEW: Kasikorn Securities sees support at 1,285 points and resistance at 1,325. CGS International Securities (Thailand) sees support at 1,290 and resistance at 1,320.
