Terror in Spain, turmoil in Washington dent stocks

Terror in Spain, turmoil in Washington dent stocks

Recap: US political instability and a terrorist attack in Spain put pressure on global stock markets, with Wall Street hitting a three-month low and European and Asian bourses also sinking, though Thailand managed a small gain.

The SET index moved in a tight range of 1,562.01 and 1,570.72 points before closing at 1,566.53, up 0.3% on the week, in moderate turnover averaging 38.46 billion baht a day for four operating days. Foreign investors were net buyers of 1.65 billion baht, while institutional investors bought 2.34 billion. Brokers were net sellers of 541.25 million baht and retail investors sold 3.45 billion.

Big movers: Ziga Innovation Public Co (ZIGA) gained 10.2% from its IPO price of 5.90 baht on its first day of trade on Thursday and closed the week at 6.45 baht. AOT led in turnover, gaining 0.5% to 52.75 baht; TRUE fell 6.4% to close at 5.10 baht, and PTT gained 2.1% to 389 baht. U led in volume, unchanged at 0.03 baht. TFI was the top loser, plunging 22.5% to 0.79 baht. The top gainer was CWT, surging 21.3% to 3.08 baht.

Newsmakers: US stock markets rallied on Friday after President Donald Trump fired chief strategist Steve Bannon, the hard-right ideologue who has become a lightning rod for criticism. Trump was forced to dissolve two business advisory councils last week after several prominent executives resigned from the bodies in response to the president's refusal to explicitly denounce white supremacists in the aftermath of violent clashes in Virginia.

Spanish authorities revealed that the death toll from terror attacks last week could have been far higher had they not foiled what appeared to have been a wider bombing plot. A van ploughed through a crowd of pedestrians on Thursday in Barcelona, killing 14 people dead and injuring more than 80 in an attack claimed by the Islamic State group.

Chinese factory output slowed more than expected in July while investment and retail sales also were disappointing, reinforcing views that the world's second-largest economy is starting to lose some steam as lending costs rise and the property market cools.

Japan's economy grew at the fastest pace in more than two years in the second quarter, notching a sixth straight quarter of expansion as domestic demand took off and exports contracted.

Iran's president has issued a direct threat, claiming his country is capable of restarting its nuclear programme within hours. President Hassan Rouhani said work could resume "in an hour and a day" if Washington continues with "threats and sanctions" against Iran.

Vietnam's prime minister called for an increase in credit growth to 21% this year to help the communist country hit its economic growth target, potentially adding to concerns over the pace of new lending.

Thailand's cabinet on Tuesday approved the extension of the 7% value-added tax rate for yet another year, saying an increase could derail the economic recovery. Successive governments have been saying the same thing every year for two decades, though the law allows for a rate of up to 10%.

As expected, the Bank of Thailand's Monetary Policy Committee kept its policy rate of 1.5% unchanged, saying the rate remains accommodative for economic recovery because domestic demand is not sufficiently broad-based. The comment reinforced the view of economists that the central bank will leave the benchmark untouched until year-end or beyond.

The cabinet on Tuesday approved four ministerial regulations that will set criteria for production-sharing contracts and service contracts, which are seen as offering more benefits to the public than the existing concession system for petroleum exploration. The move would also pave the way the opening of the 21st round of bidding for oil and gas exploration and production contracts.

International tourist arrivals in Thailand rose 4.8% in July from a year earlier, to 3.1 million visitors from China, Malaysia, Laos, Korea and India, the Tourism and Sports Ministry said. For the seven-month period, arrivals were 20.4 million, up 4.47%.

The second quarter was a weak period for the four SET-listed airlines, with only one declaring a profit, albeit sharply lower than a year ago. The worst performer in the April-June period, in terms of the size of the loss, was Thai Airways International (THAI), with a loss widening to 5.2 billion baht from 2.9 billion a year earlier, while the Thai AirAsia operator Asia Aviation (AAV) remained profitable. Nok Air was in the red as widely expected, while Bangkok Airways' loss was surprisingly wider than projected.

The SET on Thursday lifted the trading suspension for Pace Development Corporation Plc (PACE), but concerns remain about whether the Securities and Exchange Commission will require the heavily leveraged luxury property developer to amend its financial statement.

The Thailand Futures Exchange (TFEX) on Sept 4 will introduce Gold-D, a futures contract with physical gold delivery. Traders are optimistic that trade in paper gold contracts will be brisk at between 800,000 and 1 million per year within one year.

Coming up this week: The National Economic and Social Development Board will release official second-quarter GDP figures today. July auto export data will also be updated.

The euro zone ZEW business confidence index will be released tomorrow. US new home sales for July are due on Wednesday.

Central bankers and economic deep thinkers gather for their annual symposium at Jackson Hole, Wyoming from Thursday through Saturday.

Stocks to watch: Tisco Securities recommends shipping stocks given that the Baltic Dry Index (BDI) has reached a five-month high, which is a boon for TTA and PSL. Also recommended are firms poised for an upward revision of full-year net profits after strong H1 performance, among them BR, ERW, SYNTEC, SQ, TPIPP and WORK. High-dividend stocks to consider are BKD, LALIN, LH, PSH, QH and SPRG.

Asia Plus Securities recommends a three-pronged investment strategy for the second half. It comprises sustainable stocks with low volatility such as ERW, VGI and BANPU; laggards with growth potential such as UNIQ, GUNKUL, SENA and CK; and turnaround stocks such as JWD and CKP.

Technical view:

Tisco Securities sees support at 1,550 and resistance at 1,580. DBS Vickers Securities puts support at 1,550 and resistance at 1,585.

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