Recap: Upbeat US jobs data and a bold move by the European Central Bank (ECB) propelled stock markets across the world last week. Hopes for an improving economy after the National Council for Peace and Order (NCPO) pledged to move ahead quickly with investment plans and 2014 budget disbursement bolstered Thai equities. A foreign buying spree also supported sentiment.
The SET Index moved in a range of 1,440.94 and 1,463.06 points, and closed at 1,458.02, up 3% from the preceding week, with brisk turnover of 53.17 billion baht a day on average.
Foreign investors were net buyers of 8.04 billion baht after selling for nine consecutive days. Brokers were net buyers of 2.55 billion baht, local institutions sold 1.88 billion baht and retail investors 8.72 billion.
Big movers: Thai Agro Energy (TAE), the country’s third largest ethanol producer, soared 187.5% above its 2-baht IPO price on Thursday and closed at 5.75 baht on Friday. Top gainer Thai Film Industry (TFI) closed up 30.2% at 1.55 baht, and top loser Natural Park (N-PARK) fell 16.7% to 0.05 baht. Bangkok Land (BLAND) led in volume, rising 4.35% to 1.68 baht.
The top shares by turnover were Srisawad Power 1978 (SAWAD), up 9.65% to 15.90 baht; SCB, up 5% to 167 baht; and TRUE, up 2.1% to 7.25 baht.
Newsmakers: The ECB cut interest rates to record lows and introduced a series of measures to pump money into the sluggish euro zone economy, pledging to do more if needed to fight off the risk of deflation. It lowered its main refinancing rate to 0.15% from 0.25% and cut the deposit rate to -0.1% from 0%, meaning the ECB will charge banks for parking money overnight at the central bank, thus encouraging them to lend instead.
Moody’s Investors Service affirmed Thailand’s Baa1 long-term issuer ratings with a stable outlook. It also affirmed the ratings of all 12 Thai banks, saying it believed their credit fundamentals were strong enough to weather cyclical pressures and political instability in the country.
The junta last week lifted the curfew in the key tourist destinations of Pattaya, Koh Samui and Phuket, followed by Hua Hin and Krabi on Friday, to reduce the fallout on the local tourism economy. The curfew from midnight to 4am remains intact in Bangkok and other areas.
Consumer confidence in Thailand rose in May after falling for 13 straight months. The confidence index in May was 70.7, up from 67.8 in April, the lowest since November 2001.
Consumer prices in May hit a 14-month high on the back of increased food and energy prices. The consumer price index based on 450 items rose 2.62% year-on-year after a 2.45% increase in April.
The Industry Ministry will start paying an extra 160 baht per tonne to sugarcane farmers in August for cane from the 2013-14 crushing season as part of the NCPO policy to speed up financial assistance to farmers.
PTT is studying a plan to spin off its oil retail business and create a new brand as it battles allegations that it enjoys excessive profits from high fuel prices.
The NCPO made a policy U-turn by reducing the price of liquefied petroleum gas (LPG) for household use by 50 satang a kilogramme to 22.63 baht a day after a scheduled increase took effect. The move stoked speculation that fuel price cuts to alleviate the cost of living would be included in an energy reform plan.
Bangchak Petroleum has set a budget of 5 billion baht for mergers and acquisitions from this year through 2020. President Vichien Usanachot said expansion would include renewable energy ventures in Thailand and elsewhere in Asia, with each deal involving at least a 20% share of the target company.
Kasikornbank has tightened its credit-card approval criteria to guard against bad loans as household debt rises. The lender is rejecting new card applications by those who have more than four cards in their name and a debt burden surpassing 40% of income, said executive vice-president Chatchai Payuhanaveechai.
Auto-parts makers expect their performance this year to slow down amid a sagging car market. Somboon Advance Technology Plc (SAT), said its revenue was expected to drop by 7-10% from 9.35 billion baht last year, while MAI-listed Eureka Design Plc has cut its revenue target from 500 million to 420 million baht.
Teera-Mongkol Industry Plc expects the reconsideration of infrastructure investments by the NCPO will stimulate demand for bulbs, lamps, ballasts and other lighting products and lift its revenue.
Indorama Ventures (IVL) has acquired a second PET plant in Turkey. CEO Aloke Lohia said the wholly owned Artenius Turk PET plant had a capacity of 130,000 tonnes of polyethylene terephthalate a year.
The hotel operator Erawan Group Plc will spend 8.4 billion baht to open 70 hotels under its Hop Inn budget brand by 2020. CFO Kanyarat Krisnathevin said 30 would be in Thailand and 40 abroad. The expansion will begin in the Philippines, Malaysia and Indonesia due to their positive outlook, she said.
CIMB Thai Bank expects to increase its revenue from regional banking to half of its wholesale banking revenue by the end of the year from 30% now through an aggressive strategy in line with parent CIMB Group’s policy.
Coming up this week: Japan will release first-quarter GDP figures today and the Bank of Japan will meet on Friday.
US retail sales for May will be released on Thursday and consumer confidence figures on Friday.
Stocks to watch: KGI Securities maintained its year-end SET index target at 1,490 points which implies a limited upside. Its stock pick is CPALL.
Asia Plus Securities sees a better second-half economic outlook and recommends banking plays with SCB, KBANK and KKP its top picks.
Technical view: Asia Plus Securities puts support at 1,420 and resistance at 1,483, while Bualuang Securities tips support at 1,430 and resistance at 1,480.