Recap: Global stock markets last week featured short-term speculative trading on positive US leading economic indicators. However, as economic conditions improve, liquidity injections by central banks will wind down and new money committed to equities may decline.
The SET index moved up even as foreigners' net buying dwindled. The main gauge traded in the range of 1,530.84 and 1,573.10 points and closed on Friday at 1,566.92, an increase of 1.8% from the week before, with high daily average trading turnover of 62.1 billion baht.
Foreign investors were net buyers of 2.11 billion baht, institutional investors 1.67 billion and brokers 1.15 billion, while retail investors sold 4.93 billion more than they bought.
Big movers: Leading the table in trading value were ITD, closing at 7.25 baht, up 14.2% from the previous week; TRUE, up 9.6% to 7.40 baht; ADVANC; up 4.8% to 217 baht; and PTT (XD), down 2.9% to 335 baht. Solartron (SOLAR), the top gainer, closed at 6.50 baht, up 60.1% on speculative buying.
Newsmakers: The Bank of Japan left its policy rate at 0.1% and kept its bond purchase programme unchanged at the last meeting under its current governor. The markets expect more aggressive asset purchases at the next meeting on April 4 under new governor Haruhiko Kuroda, a former ADB chief.
- Investors reacted positively to the US Federal Reserve's Beige Book report on business conditions across the US. It showed that every district surveyed reported growth and cautious optimism for modest or moderate expansion.
- US initial jobless claims for the week ended March 2 decreased by 7,000 positions, signalling improvement in job market. The trade deficit for January increased to US$44 billion as demand for oil imports rebounded.
- The European Central Bank left its policy rate at 0.75% amid signs the euro zone economy was gradually improving. The Bank of England maintained its policy rate at 0.5% but sent no signal for an increase in asset purchases or an interest rate reduction.
- The central banks of Malaysia and Indonesia maintained their rates at 3% and 5.75%, respectively.
- Thailand's consumer confidence index improved, with the economic conditions outlook rising for the fifth straight month to the highest level since July 2011. Improving economic momentum and the higher daily minimum wage bolstered sentiment.
- Listed companies reported total net profits of 719 billion baht last year, up by 15.8% from 2011. Market earnings per share, net of dilution effects, were 85.11 baht, an increase of 12.1%.
Coming up this week: The UK will release manufacturing data for January, and the Italian parliament will convene for the first time since the country's inconclusive election.
- Xi Xinping will be officially confirmed as president and Li Keqiang as prime minister by the National People's Congress on Friday.
Stocks to watch: Asia Plus Securities recommends banks that have been outperforming, with a buy rating on BBL. In the ICT sector, it favours INTUCH. It also recommends buying construction and property shares on weakness as most are now trading around fair value.
Thanachart Securities says the market is undergoing sector rotation. ICT shares remain stronger than the market, while hospitality (BGH, BH, BCH) has returned to outperform. It has buy recommendations on BTS, VGI, KTB, TMB, KK, ADVANC, INTUCH, JAS, GUNKUL, SAMART, GBH, SIRI and AP.
Technical view: Asia Plus Securities expects the SET index may hit 1,585 points and test 1,600 in the short term. Thanachart Securities sees support this week at 1,565 points and resistance at 1,585.
About the author
Writer: Parista Yuthamanop & Darana Chudasri