China worries keep lid on global equity gains

China worries keep lid on global equity gains

Recap: Asian stock markets marched up early last week amid eased concerns over a Russia-Ukraine confrontation and upbeat US economic readings, but a sell-off kicked in on renewed concerns over China's economy after tepid manufacturing figures were released. The Thai stock market stayed firmly above the resistance of 1,550 points on hopes that the economy will recover now that NCPO leader Gen Prayuth Chan-ocha has been chosen as the new prime minister.

The SET Index moved in a range of 1,539.57 and 1,559.21 points and closed at 1,556.97, up 0.67% from the preceding week, in trade worth 43.58 billion baht a day on average. Foreign investors were net buyers of 1.05 billion baht in Thai shares and institutional investors bought 3.28 billion baht more than they sold. Retail investors were net sellers of 4.31 billion baht, while brokers pulled 15.74 million baht out of the market.

Big movers: Takuni Group (TAKUNI), an LPG and NGV supplier, gained 86.25% above its 1.60-baht IPO price to 2.98 baht on its opening day on Thursday, and finished the week at 3.14 baht. Top gainer ABC surged 247.5% to 8.20 baht and top loser WAT fell 14.3% to 0.06 baht. N-PARK led by volume, unchanged at 0.07 baht. The top three by turnover were TRUE, up 4.8% to 10.80 baht; TMB, up 3.4% to 3.04 baht; and JAS, up 3% to 6.75 baht.

Newsmakers: Growth in China's factory sector slowed to a three-month low in August. The HSBC/Markit Flash Manufacturing PMI fell to 50.3 from July's 18-month high of 51.7.

Japan's exports rose 3.9% in July, the first gain in three months, after falling 2% in June. Imports rose 2.3%, widening the trade deficit unexpectedly to 964 billion yen.

To no one's surprise, the National Legislative Assembly (NLA) selected junta leader Gen Prayuth Chan-ocha as prime minister. Analysts expect more political stability and a strong economic recovery in the next 12 months before Thailand gets back to election mode, possibly late in 2015.

The National Council for Peace and Order (NCPO) has approved the development of five areas as special economic zones (SEZs) in Tak, Songkhla, Sa Kaeo, Trat and Mukdahan provinces. The Thai Chamber of Commerce predicts the five zones would increase border trade by at least 20% a year and also improve tourism and labour mobility.

Airports of Thailand has approved a proposal to speed up construction of a new passenger terminal and monorail at Suvarnabhumi Airport. Board chairman Prasong Phunthanet said the 24-billion-baht development would enable the airport to cope with an extra 20 million passengers a year.

The NCPO approved 210 billion baht in infrastructure projects, including six electricity and power generation projects worth 172 billion. The boards of three state enterprises approved five projects worth 38.4 billion baht including new airport rail link, mass transit and airport work. The Board of Investment also approved 15 proposals valued at 40.5 billion baht but cancelled tax benefits for some businesses such as green tea, snacks and bread.

The Thai economy grew by 0.4% year-on-year in the second quarter, improving from a 0.5% contraction in the first three months. Seasonally adjusted quarter-on-quarter growth was 0.9%, helping the country avoid a technical recession. Nonetheless, weaker than expected performance in the global economy and a slower than expected local recovery (especially in tourism) compelled the NESDB to cut its growth projection to between 1.5% and 2.0% this year, from an upper target of 2.5% earlier.

Profits of SET-listed companies jumped by 20.62% year-on-year in Q2 while turnover increased 7.7%, led by energy and utilities, banking and property. The companies with the highest earnings for the first half were PTT, PTTEP, SCB, KBANK and BBL.

Profits of MAI-listed companies fell by 21.2% year-on-year to 687 million although sales grew by 5.63%. The five companies with the highest net profits were EA, BROOK, JUBILE, FPI and TNH.

Central Pattana, the country's largest shopping mall developer, will delay the opening of its first mall in Malaysia to 2017 from 2016, saying it needs more time to study the market.

Amata Corp has accelerated its investment in Vietnam with the building of an integrated city industrial estate in a move aimed at cashing in on the opening of the Asean Economic Community.

The contractor Ch. Karnchang (CK) expects annual revenue to exceed 40 billion baht, above its previous target of 30 billion, after 2015, helped by state infrastructure investment. It said it was ready to bid for any megaproject as a contractor or project operator.

The hospital chain BGH and a subsidiary have entered into a share purchase agreement for Save Drug Center Co Ltd for an amount not exceeding 380 million baht. Save Drug has 107 stores and branches nationwide.

Thai Airways International says it will focus on increasing flight frequencies on regional routes to tap higher travel demand and provide better services with new aircraft to substitute for decommissioned ones. THAI aims to have 103 aircraft in 2018 with an average age of 7.4 years, compared to its current 99 with an average age of 9.3 years. Its projection for 2018 is 47 million regional passengers, up 2.6% (including 11 million intercontinental, up 6.4%, and 25 million domestic, up 4%).

The developer SC Asset expects revenue growth of 20% this year to 12 billion baht, driven by domestic consumption and government spending in H2. It plans five new projects worth a combined 7 billion baht in the second half.

Coming up this week: Exotic Food Plc (XO) will debut on the Market for Alternative Investment (MAI) today. Also due today is trade data for July.

The annual Thailand Focus equity market roadshow will take place from Wednesday through Friday.

The revised MSCI indices will take effect at the close of trade on Friday. No new Thai stocks are being added but two — GJS and GSTEL — will be deleted.

Stocks to watch: With a recovery taking shape, KGI Securities says domestic confidence plays such as residential property, construction and banks should perform well, while the tourism sector is expected to pick up ahead of the high season in the fourth quarter. Its top picks are AP, SPALI, KTB, AAV and ERW.

Asia Plus Securities recommends selective buys in big caps with potential for high upside gains such as SCB and TMB; stocks that will benefit from government infrastructure work such as PYLON, SYNTEC and SEAFCO; and stocks with rising earnings momentum such as RML, SRICHA, GFPT and STPI.

Technical view: Finansia Syrus Securities sees support at 1,550 to 1,546 with resistance at 1,555 to 1,558. Thanachart Securities tips support at 1,550 and resistance at 1,600.

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