Recap: The International Monetary Fund's reduction of its forecast for world economic growth jolted global stock markets early last week and also sent oil prices plunging. A dovish tone in US Federal Reserve minutes helped ease worries briefly before markets sank again on Friday. Thai shares were hit by foreign investor selling and profit-taking by local investors.
The SET Index last week moved in a range of 1,527.88 and 1,574.22 points and closed at 1552.72, down 1.1% from the previous week, on turnover averaging 45.5 billion baht a day. Brokers were the largest net sellers at 4.03 billion baht, followed by foreign investors at 2.4 billion baht. Institutional investors were net buyers of 3.33 billion baht and retail investors bought 2.8 billion more than they sold.
Big movers: Top gainer RICH jumped 75.3% to 1.28 baht on speculation about a takeover. Top loser PREECHA fell 17% to 2.84 baht. N-PARK led in share volume, unchanged at 0.06 baht. The top three by turnover were TRUE, down 1.7% to 11.40 baht; PTT, steady at 364 baht; and KBANK, down 0.4% to 228 baht.
Newsmakers: The IMF cut its forecasts for the third time this year, warning of weakness in core euro zone countries, Japan and big emerging markets including Brazil. It cut its global growth forecast for this year to 3.3% from 3.4% earlier, and said growth next year would be 3.8%, down from 4% predicted earlier.
The US Federal Reserve has grown more concerned that weak overseas growth and a strengthening US dollar will hurt the domestic economy and hold down inflation, indicating that policymakers are in no hurry to raise interest rates, according to minutes of the Sept 16-17 policy meeting released last week.
The US job market continues to improve, with unemployment benefit claims now at the lowest level since before the 2007-09 recession, based on figures for the week ended Oct 4.
The World Bank cut its 2014-16 growth forecasts for developing East Asia, noting that China was likely to slow due to policies aimed at putting the economy on a more sustainable footing. It also cautioned of capital-flight risk in Indonesia. It expects the developing East Asia and Pacific region to grow 6.9% this year and next, down from 7.1% previously forecast, slowing to 6.8% in 2016.
The World Bank sees only 1.5% growth for Thailand this year due to the slow recovery in domestic consumption and exports, but a rebound in tourism and increased public spending coupled with an export recovery could revive growth next year to 3.5%.
Bank of Japan Governor Haruhiko Kuroda stressed his resolve to maintain massive stimulus for a prolonged period but shrugged off the need to expand it soon. The central bank is increasing base money, or cash and deposits at the central bank, at an annual pace of 60-70 trillion yen via purchases of government bonds and risk assets.
The Finance Ministry forecasts economic growth of 1.7% this year but is pinning its hopes on stimulus measures bumping the figure up to 2%.
Prime Minister Prayut Chan-o-cha said martial law was still needed for long-term security, but relaxation would be considered step by step as conditions improve.
The Finance Ministry expects at least 30% of the 23 billion baht budget to repair public facilities will be disbursed by the end of this year. The work is a part of the government's 364-billion-baht stimulus plan.
The latest CEO Survey, conducted in the third quarter, showed that 92% of respondents believed the Thai economy would improve in the next six months, with 77% saying it will be "slightly better" and 15% saying it would be "much better". Only 8% said it would be "the same or worse". The results were based on responses from 77 CEOs out of the 650 companies listed on the SET and the MAI.
Golden Land Property Development Plc hopes to complete a share acquisition in Krungthep Land (KLand) within weeks, said Saenphin Sukhee, managing director for residential development. The company would buy the KLand shares from SMJC Real Estate Co, a unit of TCC Group owned by liquor tycoon Charoen Sirivadhanabhakdi.
Channel 3 has agreed to start simulating on Channel 33 (HD) after a court helped it settle a dispute with regulators over a shift to digital broadcasting, ending the most dreary business soap opera of the year.
Saha Pathanapibul Plc (SPC) outlined an Asean expansion strategy, saying it has established wholly owned distribution subsidiaries in Vietnam and Cambodia, while in Myanmar it has a 50/50 joint venture with a local firm. It expects to double the sales contribution from Asean markets to 1 billion baht next year, excluding border trade.
Chai Wattana Tannery Group Plc (CWT) is considering investing in the solar rooftop business as both an electricity consumer and producer. It estimated it could install solar power generation capacity of 5-6 MW on roof spaces at its leather and furniture plants.
The SEC is considering a petition filed by a co-founder of Thai Solar Energy Co (TSE) requesting a halt to the company's initial public offering after a dispute over its recent recapitalisation. Phaiboon Maturanont is suing two major shareholders, Pracha and Catherine Maleenont, seeking 1 billion baht in compensation and suspension of the IPO plan, claiming that the defendants put 8.34 million of his capital-increase shares under the hammer even though he had already paid 83 million baht for the shares.
Coming up this week: Thai banks will begin to release third-quarter results to start the earnings season on the SET.
China will release trade data for September today and FDI figures tomorrow. Also due tomorrow are euro zone industrial production figures for August.
China will release inflation data for September on Wednesday.
US initial jobless claims for the previous week are due on Thursday, along with industrial production for September. Euro zone inflation figures are due the same day.
Thai new-car sales figures are due on Friday, and in the US, the closely watched University of Michigan Consumer Sentiment Index will be released.
Stocks to watch: Tisco Securities has "buy to accumulate" recommendations for BBL, CK, KBANK, LPN, MC, SAMART, SPALI and TMB. It recommends avoiding petrochemicals in light of falling oil prices. Its stock picks for October are BTS, CPN, GFPT, LPN and TUF.
Asia Plus Securities has buy recommendations for AIT and BTS. It also recommends that investors snap up export-related stocks as earnings are likely to peak in the third quarter, a high season for electronics. Its top picks in the sector are HANA and DELTA. HANA is expected to report a rise in 2014 normalised profit of 48.5% year-on-year, with a dividend yield of 4.5%. DELTA is expected to see 14.6% year-on-year growth in earnings this year and 16.4% next year, with a dividend yield of 4.5%.
For food exporters, sales of feed and processed food are expected to rise, while chicken exports should be up on higher demand in Japan and Russia. Top picks are CPF and GFPT owing to a rebound in the domestic livestock business. Their earnings are projected to grow by 40% this year and 20% in 2015, with dividend yields around 3%.
Technical view: Asia Plus Securities sees support at 1,543 and resistance at 1,576. Capital Nomura Securities pegs support at 1,546 and resistance at 1,573.