Recap: The surprising decision by the Bank of Japan to hold its fire on fresh stimulus rattled stock markets globally last week. The concerns also pushed the Thai bourse below 1,400 points on Thursday before a buying spree in big caps led to a small rally on Friday.
The SET Index moved in a range of 1,396.16 and 1,423.15 points and closed at 1,404.61, down 0.4% from the previous week, on moderate turnover averaging 38.3 billion baht a day. Retail investors were net buyers of 3.46 billion baht and institutional investors also bought 372.05 million. Brokers cashed out 1.1 billion baht and foreign investors were net sellers of 2.73 billion.
Big movers: SSI was the top gainer, adding 25% to 0.05 baht. BANPU was the top loser, sinking 31.9% to 12.80 baht. Leading in turnover were PTT, off 1.9% to 304 baht; SUPER, also top in volume, jumping 19.5% to 1.84 baht; and JAS, rising 2.4% to 4.36 baht.
Newsmakers: The Bank of Japan surprised markets by declining to adopt more stimulus, saying it would continue with its earlier plan to increase base money at an annual pace of 80 trillion yen (US$732 billion) via aggressive asset purchases. It also left unchanged the 0.1% negative rate it applies to some of the excess reserves that financial institutions park at the central bank.
Rising oil prices and a more stable Chinese economy allowed the US Federal Reserve to shift its focus back to the home front, as it signalled that US jobs and inflation data would determine whether it hiked interest rates in June.
Foreign direct investment (FDI) in Indonesia in the first quarter rose 17.1% from a year earlier in rupiah terms, adding to signs of improvement in Southeast Asia's largest economy.
The Fiscal Policy Office (FPO) cut its forecast for economic growth this year to 3.3% from 3.7% amid concerns over exports. Although exports grew in February and March, thanks to unusual one-off items, the Finance Ministry think tank forecasts a 0.7% contraction for the year, revised from 0.1% growth predicted earlier.
Weak exports and declining household income hurting private consumption will keep Thai GDP growth at only 2.5%, says Siam Commercial Bank's Economic Intelligence Center (EIC). It sees exports falling by 2.1% -- down from a flat reading projected previously -- in line with the slower recovery of advanced economies.
The cabinet approved a Finance Ministry proposal to extend deposit protection amid uncertain economic conditions. The cuts in deposit protection will be made in steps, with protection for 25 million baht worth of deposits per bank until Aug 10 this year, 15 million until August 2018, 10 million until August 2019, 5 million until August 2020, and 1 million after that. The original plan called for a cap of 1 million baht to take effect in August this year.
Exports are likely to slip back into the red for the rest of the year, say forecasters.
The cabinet approved the Prachuap Khiri Khan-Chumphon double-track railway project worth 17 billion baht. E-bidding is planned in August with construction to start the following month and be completed in 2019. Approval for three more projects will be sought soon, with construction to start by the end of this year.
The National Reform Steering Assembly (NRSA) has proposed that the cabinet approve a sugar tax to promote public health and raise about 10 billion a year in state revenue. Under the plan, drinks with between 6 and 10 grammes of sugar per 100ml would be subject to a rate that would raise their retail prices by at least 20%, while drinks with more than 10g of sugar per 100ml would cost 25% more. Beverage producers are expected to lobby strongly against the idea.
The Finance Ministry has updated the conditions for nano-finance operations. Loan principal will be capped at 10,000 baht per borrower, down from the previous 100,000 baht, with interest capped at 3% per month, and lenders will be limited to specific provinces. Limiting the scope of the lending area will allow the government to better track loan shark activity.
Kasikornbank (KBank) will require additional reserves for loan losses through the third quarter in line with rising non-performing loans (NPLs). President Teeranun Srihong said the higher NPLs and provisions were still in line with expectations, and the bank's forecast for NPLs between 3.5% and 3.6% remained unchanged.
KBank lowered its net interest margin target to between 3.3% and 3.5% this year from 3.4% to 3.6% previously, after recent cuts in its prime lending rates by a quarter percentage point.
PTT Exploration and Production Plc (PTTEP) posted another drop in first-quarter profit, mainly due to lower crude prices. Net profit declined by 41% to US$157 million.
Yuanta Securities Asia Financial Services, a Taiwan-based securities broker, has agreed to acquire a 99.99% stake in KKTrade Securities from Kiatnakin Phatra Financial Group (KKP), subject to SEC approval.
SCC reported a Q1 net profit of 13.6 billion baht, up 19% on the quarter and 23% on the year.
Coming up this week: April inflation figures for Thailand will are due today, along with Markit Eurozone Manufacturing PMI.
China will release the Caixin factory PMI, a private gauge of manufacturing activity, tomorrow.
US private-sector employment and the Markit Eurozone Composite PMI are due on Wednesday, followed by US non-farm payrolls on Thursday.
Stocks to watch: DBS Vickers Securities (Thailand) has buy recommendations on SCC, THANI, SPALI and RATCH, and recommends speculative trading in stocks BCH, TWPC, BJC and MAJOR.
Asia Plus Securities recommends stocks with good fundamentals including EA, LIT, SCC and SIRI. Bualuang Securities has buy recommendations on COM7, GFPT and BDMS
Technical view: KTB Securities (Thailand) sees support at 1,385 with resistance at 1,430 points. DBS Vickers tips support at 1,380 and resistance at 1,430 points.