Recap: The market jumped at midweek in response to the surprise interest-rate cut to 2.75% by the Bank of Thailand to help shield the domestic economy from the impact of further global weakening. The SET index rose 1.07% on Wednesday and remained in positive territory through Friday.
The SET index moved in a range of 1,286.12 and 1,314.32 points and closed at 1,307.71, up 0.83% from the week before, with daily average trade of 34.42 billion baht. Retail investors were net sellers of 3.15 billion baht in shares. Local institutions were net buyers of 2.72 billion baht, brokers 395 million and foreign funds 34 million. However, for the month to Oct 19, foreigners have been net sellers of 8 billion baht.
Big movers: The ICT sector topped the table after the Big Three succeeded in paying rock-bottom prices for 3G wireless broadband spectrum at a competition-free auction. Advanced Info Service (ADVANC) shares went up 5.45% to 202 baht, TRUE rose 1.8% to 5.70 baht and Shin Corp (INTUCH) rose 2.76% to 65.25 baht.
Newsmakers: Pressure is mounting on Thailand over its costly rise-pledging programme. The US Rice Federation has complained to the US Trade Representative that Thailand essentially will be dumping rice on the world market if and when it finally sells the massive stocks purchased from farmers at prices 40% above real market rates.
- More signs of malaise in Europe, where industry data showed sales of new cars plunged 10.8% in September from a year earlier. However, sales in Britain grew 8.2%.
- A National Broadcasting and Telecommunication Commission committee endorsed the 3G bid results. The only three bidders, units of AIS, DTAC and TRUE, each won their maximum quota of 15MHz of spectrum, for a total of 41.625 billion baht, only 2.78% above the minimum price. Chulalongkorn University experts said the minimum price per slot should have been 6 billion baht and not 4.5 billion.
- The 3G auction has been widely criticised as uncompetitive, with the Finance Ministry's permanent secretary even suggesting the NBTC and the Big Three could face legal questions about collusion. The NBTC hopes to get things right before next year, when it has to start thinking about a 4G auction.
- Tokyo-based Rating & Investment Information (R&I) upgraded its foreign and local currency issuer ratings for Thailand from BBB and BBB+ and A- respectively with a stable outlook, and affirmed foreign currency short-term debt for Thailand at a-2.
- Thailand's automobile production in September hit a record high of 228,500, up 31.2% year-on-year. Exports also hit a record of 98,268 units.
- Interest among local investors in Singapore and Malaysian stocks has been building since the SET joined the Asean Trading Link last week, say local brokers. Top picks are big names such as Singapore Telecom and Thai Beverage on the Singapore Exchange, as well as AirAsia and Petronas on Bursa Malaysia. Local investors can now buy and sell shares on the other two bourses through their Thailand-based brokers.
- Emery Oleochemicals, a 50:50 joint venture between PTT Global Chemical Plc and Malaysia's Sime Darby Bhd, will spend US$50 million to expand its biopolyol capacity in the US.
- The central bank's Monetary Policy Committee cut its repurchase rate to 2.75% from 3%, saying inflation remained low, while the world economy was still weak, so it was appropriate to support domestic demand growth, which has been weakening.
- Central Retail of the Chirathivat family intends to take over MAI-listed Office Mate (OFM) through a tender expected to be completed by year-end. OFM projects revenue will increase from 1.29 billion baht to 8 billion next year, and will move from the MAI to the SET.
- Serm Suk, looking for more products to distribute once its Pepsi bottling deal ends next month, is acquiring the business of Wrangyer energy drinks from Thai Beverage.
- Bank of Ayudhya will issue up to 12 billion baht in 10-year subordinated debentures. The bank has an option to raise the amount to 20 billion baht, in light of huge demand, as well as a call option at the end of the fifth year.
Coming up this week: The US Federal Reserve will open a two-day meeting on Tuesday, though analysts don't expect it to take any dramatic new steps.
- The Thai Commerce Ministry will report September export and import figures on Wednesday. The same day, Siam Cement Group, the country's biggest industrial group, will release its Q3 results.
Stocks to watch: Asia Plus is overweight on the auto sector, believing profits for the six listed companies it covers will grow with auto production. It forecasts an 18.7% rise from H1 in second-half profits for the sector, bringing full-year profit to 3.5 billion baht, up from 1.49 billion last year when floods crippled the industry. The broker's top picks are STANLY and SAT. In other sectors, ASP has buy recommendations for BANPU, MINT, KTB and TCAP.
- Maybank Kim Eng recommends buying KTB, TCAP and THANI in anticipation of good Q3 performance and benefits benefit from lower interest rates. It has a hold recommendation on BANPU and BIGC.
Technical view: Finansia Syrus sees support this week at 1,300 and resistance at 1,320. Asia Plus sees support at 1,285 and resistance at 1,315.