Foreign interest keeps set moving upward

Recap: Persistent offshore fund inflows overshadowed political tensions and helped the Thai stock market gain. Elsewhere, the US Federal Reserve confirmed another $10-billion reduction in its stimulus asset purchases but suggested an interest-rate increase was still far off.

However, political factors are expected to weigh on the SET in coming weeks with the Constitutional Court and the National Anti-Corruption Commission (NACC) preparing to rule in legal cases that could force caretaker prime minister Yingluck Shinawatra and her cabinet to step down.

The SET Index moved in a range between 1,405.04 and 1,421.95 points, and closed near the week’s highest level at 1,421.48, up 0.95% from a week earlier, with daily average turnover of 31.39 billion baht for four trading days.

Foreign investors continued their buying streak with a net position of 3.29 billion baht. Retail investors were also net buyers of 32 million baht. Local institutions were net sellers of 2.97 billion baht and brokers sold 357.54 million more than they bought.

Big movers: Kaset Thai International Sugar Corp (KTIS) made a weak debut, losing 3% below its 10-baht initial public offering (IPO) price. The shares closed on Friday at 8.85 baht, slipping 11.50% from the offering price.

International Engineering Corporation (IEC), last week’s leader in trading volume and the top gainer, closed at 0.03 baht, gaining 50%. Top loser Wattana Karnpaet (NEW) dipped 18.5% to 51.75 baht.

Large-cap shares such as Advanced Info Service (ADVANC), Kasikornbank (KBANK) and the green tea manufacturer Ichitan (ICHI) led in trading value. ADVANC closed at 245 baht, up 1.2%; KBANK closed at 192 baht, up 2.95%; and ICHI closed at 19.40 baht, up 8.4% on the week and 49% from its IPO price.

Newsmakers: US first-quarter GDP grew only 0.1% year-on-year, lower than expected, reflecting the effects of a very severe winter.

The Fed approved a reduction in its monthly bond purchases to $45 billion and signaled that interest rates would remain low for some time until the economy gains better traction.

China’s manufacturing PMI picked up slightly in April to 50.4 points, from 50.3 in March – rising further above the 50 line that separates expanding activity from a contraction.

Thailand’s inflation rose 2.45% year-on-year, the highest level in 12 months, due to higher food prices amid the political turmoil affecting economic growth.

The political temperature is expected to heat up as the People’s Democratic Reform Committee (PDRC) and the red-shirt United Front for Democracy against Dictatorship (UDD) plan mass rallies on May 14. The Constitutional Court is expected to rule around the same time in a case against caretaker PM Yingluck Shinawatra relating to the improper transfer of National Security Council secretary-general Thawil Pliensri. The NACC, meanwhile, may vote on the negligence charge against Ms Yingluck in connection with the failed rice-pledging scheme on either May 8 or 13.

The Election Commission (EC) has set a date for a new poll on July 20 and the caretaker government has agreed, but the Democrats as usual are keeping everyone guessing about whether they will compete.

Democrat Party leader Abhisit Vejjajiva has proposed that he will neither contest in the new election nor seek office if his reform plan is accepted.

The Finance Ministry’s Fiscal Policy Office (FPO) predicts first-quarter gross domestic product (GDP) will shrink 0.2% before bouncing back in the second quarter, and is maintaining its full-year 2.6% projection. Official Q1 figures will be released on May 19.

Thailand’s exports are expected to grow by only 3-4% this year, much lower than the 5% targeted by the Commerce Ministry, as China’s slowing economy poses higher risks to shipments. “China’s economic prospects are a key concern for Thai exports this year,” said Wallop Vitanakorn, vice-president of Thai National Shippers Council.

Motorcycle sales are expected to stay below 1.85 million this year as the economic slowdown is putting off potential buyers. Last year, overall sales fell 6.1% to 2 million. Sales in the first quarter this year fell 21% to 431,795 units.

Siam Commercial Bank plans an aggressive expansion of its international banking business in the coming years, with a focus on Cambodia, Laos, Myanmar and Vietnam (CLMV) to capitalise on higher opportunities following the formation of the Asean Economic Community (AEC).

The new Board of Investment (BoI) called its first meeting and pledged to accelerate approvals for pending investment applications worth 729 billion baht.

The residential property market in greater Bangkok could drop by up to 40% in terms of presales in the first half of the year, following a first-quarter fall of 42%, industry forecasts showed.

Siam Cement Group (SCG), Thailand’s top industrial conglomerate, is set to invest 11 billion baht to expand its business in Asean, including constructing a new cement plant in Laos worth 10 billion baht.

Central Plaza Hotel Plc (CENTEL) will pay a dividend of 0.40 baht per share, the highest in its history, thanks to its strong gains in the hotel and food business in 2013.

Airports of Thailand plans to develop “airport city” projects at six key airports with an initial investment of more than 30 billion baht. AOT president Makin Petplai said the plan would go to the AOT board for approval next month.

PTT Exploration and Production Plc reported a 44% drop in net profit in the first quarter due to lower foreign-exchange gains and higher depreciation costs for its Australia project.

Thailand’s car sales are unlikely to reach 1.2 million units this year as projected, as political turmoil is expected to weaken domestic consumption, said Ong-arj Pongkijworasin, the new chairman of the Federation of Thai Industries’ automotive industry club.

Coming up this week: Indonesia will report first-quarter GDP data today and HSBC will release its final China Manufacturing PMI for April. The euro zone Markit Composite PMI for April is due tomorrow, and Thailand will report its consumer confidence index for April on Thursday.

China will release trade data for April on Thursday. The same day, both the European Central Bank and the Bank of England will meet.

Stocks to watch: Finansia Syrus Securities (FSS) recommends a wait-and-see strategy, given the impact of political developments and a lack of positive cues. The broker rates SCC, PS and JAS and a hold and has a buy rating on BGH.

Asia Plus recommends buying IRPC and IVL as rising global demand will stoke their earnings growth.

Technical view: FSS tips support at 1,396 and resistance at 1,426. Asia Plus puts support at 1,390 with resistance at 1,427.

About the author

Writer: Nuntawun Polkuamdee & Darana Chudasri