Asian shares advance but trade still a worry

Asian shares advance but trade still a worry

Recap: Asian stocks advanced yesterday while European markets opened lower as investors waited for American jobs data and details of US-China trade talks. The investment outlook is still marred by uncertainty over trade, as the US has imposed duties of more than 400% on steel imports from Vietnam.

The SET index moved in a range of 1,714.98 and 1,748.53 points before closing at 1,731.23, almost unchanged from the previous week, in turnover averaging 70.18 billion baht a day.

Foreign investors were net buyers of 10.2 billion baht and brokerage firms bought 814.4 million worth of shares. Institutional investors were net sellers of 10.3 billion baht and retail investors sold shares worth 740 million.

Newsmakers: US President Donald Trump has nominated Judy Shelton, a longtime critic of the US Federal Reserve and advocate of the gold standard, as a Fed governor, along with Christopher Waller, research director at the St Louis Fed. Both are likely to support low borrowing costs.

IMF chief Christine Lagarde has been nominated as the first woman to lead the European Central Bank, pending approval from European parliamentarians. But critics say her political background and lack of central bank experience raise questions about the independence of monetary policy.

Oil prices jumped after Opec kingpin Saudi Arabia and non-member Russia agreed to keep daily oil output caps, but Iran warned the move risks killing off the cartel that pumps a third of global supplies.

Iran ignored US and EU warnings and announced it will exceed the maximum enrichment level it agreed for uranium within days, in response to the failure of the other parties to a 2015 nuclear deal to provide it with promised relief from sanctions.

Unemployment rate in the euro zone dropped to 7.5% in May, its lowest level since July 2008, despite mounting concerns that global trade wars could cool already tepid economic growth.

The Bank of Thailand is reducing its July issuance of three-, six- and 12-month bonds by 60 billion baht, in a move seen as aimed at curbing hot money and the baht's rapid gain.

Despite the recent trade truce between the US and China, the country's export prospects remain gloomy, says the Thai National Shippers' Council. It says the strong baht could reduce exporters' revenue by up 500 billion baht this year, with shipments expanding by 1% at best.

CIMB Thai Bank predicts the Bank of Thailand to cut its benchmark interest rate twice by the first half of next year in a bid to spur economic growth and curb hot-money inflows.

Fiscal policy should play a larger role than monetary policy in lifting the country, given that the 2019 mid-year fiscal budget amounting to 90 billion baht is sufficient despite the delay in the formation of the new government, says Tak Bunnag, head of global markets at Bank of Ayudhya.

GDP growth is likely to be below 3% in the first half before improving in the latter half on an expected recovery in exports, says Don Nakornthab, senior director of the economic and policy department at the Bank of Thailand.

The Commerce Ministry has lowered its annual inflation forecast to a range between 0.7% and 1.3% this year, from 0.7% to 1.7% earlier, citing lower energy prices, a stronger baht and dim export prospects.

Consumer confidence fell to its lowest level in 21 months in June as the public fretted over political instability, global economic uncertainty and low farm product prices.

Business operators are urging the new government to raise the daily minimum wage in line with the resolution of the tripartite committee, which calls for increases of 2-10 baht from the current range of 308-330 baht, depending on location. During the election campaign, parties were making promises to lift the wage to as much as 400 baht.

The Tourism Authority of Thailand has revised down its forecast for international arrivals this year to 40.2 million from 41.3 million forecast earlier, attributed to the global economic slowdown, the stronger baht appreciation and higher fuel prices.

Newly launched condominium supply in the second quarter continued to rise in Bangkok, with most launches in June after the political situation became clearer, says the property consultant Colliers International Thailand.

Due diligence for the merger of TMB Bank and Thanachart Bank is almost complete, marking a step towards the formation of a single bank by December.

Siam Commercial Bank (SCB) has entered into a binding agreement to sell 99.2% of subsidiary SCB Life Assurance to the Hong Kong-based insurer FWD Group Financial Services, for 92.7 billion baht, marking Southeast Asia's biggest life insurance acquisition deal.

PTT Plc is increasing investments in electricity generation, particularly renewables, given what it says is a "highly uncertain" outlook for oil over the next year.

Coming up: Germany will release May trade figures on Monday. Australia will release June NAB business confidence on Tuesday and Westpac consumer confidence for July on Wednesday. China will announce June inflation and Britain will release May trade figures on Wednesday.

The Fed will release the minutes of its most recent meeting on Thursday, and the US and Germany will release June inflation. China will release June trade figures on Friday.

Stocks to watch: Fundamental picks by DBS Vickers Securities Thailand for this quarter are BBL, DIF, DRT, QH, STEC and WHA. For dollar-cost averaging, the firm suggests AOT, BBL, CPALL, BDMS and PTT. High dividend yield stocks include KKP, TISCO, TOP, SCC, LH, DREIT, HREIT, DIF and WHART.

Tisco Securities identifies stocks benefiting from baht appreciation as COM7, ILINK, SYNEX and TPIPL. Consumer stocks benefiting from new government policies are CPALL, BJC, CPN, MAJOR, KTC, AEONTS, AMATA, ROJNA, WHA, CK and STEC.

Technical view: DBS Vickers sees support at 1,690 points and resistance at 1,740. Bualuang Securities sees support at 1,700 and resistance at 1,750.

Do you like the content of this article?
COMMENT