Trade dominates agenda, weak GDP depresses SET

Trade dominates agenda, weak GDP depresses SET

Recap: Most world stock markets rose yesterday as Chinese President Xi Jinping downplayed worries about the state of trade negotiations with the US, and officials in Beijing invited their US counterparts for talks next week. Fear that US bills backing Hong Kong protesters could strain relations with China and delay a trade deal had been worrying investors.

Thailand's weaker-than-expected third-quarter growth suppressed investor appetite locally, sending the SET index back below 1,600 points again. The index moved in a tight range of 1,583.77 to 1,609.99 points before closing at 1,597.72, down 0.29% on the week, in turnover averaging 45.7 billion baht a day.

Institutional investors' selling spree continued, as they offloaded 3.07 billion baht in shares and foreign investors sold a net 1.05 billion. Retail investors were net buyers of 3.47 billion baht, and brokerage firms bought a net 645 million.

Newsmakers: Most Federal Reserve officials believed the three rate cuts they have made this year will be enough unless the US economy weakens significantly, according to the minutes of the October Fed meeting.

  • The People's Bank of China unexpectedly trimmed a lending rate, the first such cut in four years, sending a signal that it is ready to act to prop up slowing growth. The seven-day reverse repurchase rate was lowered to 2.50% from 2.55%. It then cut the one-year Loan Prime Rate (LPR), based on quotes from a panel of banks, to 4.15% from 4.20%. The five-year LPR was lowered to 4.80% from 4.85% to reduce company funding costs and shore up an economy hurt by slowing demand.
  • Japan's exports tumbled the most in three years in October, falling 9.2% year-on-year, continuing the longest run of declines since a 14-month stretch from October 2015 to November 2016.
  • Indonesia's central bank kept its benchmark rate unchanged at 5%, but lowered the amount of cash that banks must hold as reserves to provide additional liquidity to lenders and support growth.
  • The State Bank of Vietnam cut its interest-rate cap for dong deposits with maturities of 1-6 months to 5% from 5.5%, effective Tuesday. It also ordered banks to lower the maximum dong lending rate for short-term loans to 6% from 6.5% to support key business sectors.
  • Thailand's economy expanded 2.4% year-on-year in the third quarter, slower than policymakers had forecast, following growth of 2.3% in the second quarter and 2.8% in the first quarter. The weak reading prompted the National Economic and Social Development Council (NESDC) to cut its 2019 GDP forecast again to 2.6% -- from an earlier projection of 2.7% to 3.2%.
  • The country's exports have not recovered, falling 4.54% year-on-year in October, the third straight monthly contraction. For the first 10 months, the US dollar value of exports was down 2.4% year-on-year.
  • The cabinet believes growth in the fourth quarter will outpace the 2.8% pace seen a year ago, underpinned by the Taste-Shop-Spend scheme to boost domestic consumption, according to government spokeswoman Narumon Pinyosinwat.
  • Fresh economic stimulus measures are on the cards in a last-ditch effort to boost full-year economic growth in light of weak third-quarter figures. The Finance Ministry is considering aid measures for several sectors, particularly for small and medium-sized enterprises (SMEs), said minister Uttama Savanayana.
  • The faltering economy is leading to more bad loans among small businesses, said Tharith Panpiemras, senior director of banking supervision at the Bank of Thailand. An NPL uptick for mid-sized SMEs has been spotted in some industries, especially food, electronics, auto parts and chemicals, as these sectors face external risks, particularly the trade spat between the US and China.
  • The local automotive industry in October contracted in terms of production, sales and exports, pressured by the US-China trade dispute and the sluggish local economy. Vehicle output for October fell by 22.5% to 152,787 units, according to the Federation of Thai Industries.
  • New corporate bond issuance this year in Thailand has already reached a record 1 trillion baht, well ahead of the full-year forecast of 750 billion to 800 billion made by the Thai Bond Market Association. It credits strong demand for fund mobilisation for mergers and acquisitions as well as business expansion locally and abroad.
  • The Constitutional Court stripped Future Forward Party leader Thanathorn Juangroongruangkit of his MP status for failing to properly report the divestment of his media shareholdings in a company that produced two now-closed lifestyle magazines. The Election Commission is now considering whether to seek criminal prosecution.
  • The Excise Department has proposed that local airlines increase the frequency of flights to second-tier provinces to enhance tourism there in return for a reduction in the excise tax on jet fuel.
  • Deputy Prime Minister Somkid Jatusripitak says the 5G network must be rolled out by mid-2020 to ensure the country's competitiveness in the region as peers aim to deploy their ultra-fast internet networks next year.
  • SET-listed Minor International (MINT) has taken over Chicken Time, a chain operating over 40 outlets in Thailand under the popular BonChon chicken brand, in a deal worth 2 billion baht.
  • Pruksa Real Estate, the development arm of SET-listed Pruksa Holdings (PSH), will downsize its projects as it looks to lure middle- to upper-end buyers with strong purchasing power amid stagnant market growth next year.
  • SET-listed Tipco Asphalt (Tasco), the country's biggest asphalt maker, expects sales volume of 2.2 million tonnes this year, exceeding the previous estimate of 1.9 million as road development across Asia accelerates.

Coming up: Germany is due to release the November business climate index on Monday consumer confidence for December on Tuesday. The US on Wednesday will release revised third-quarter GDP, October durable goods orders, personal spending and income.

  • Due on Thursday are euro zone business and consumer confidence readings for November, and German business confidence for November.
  • On Friday, the UK will release November consumer confidence, Japan will announce October industrial production and November consumer confidence. South Korea's central bank will hold a policy meeting, and euro zone preliminary inflation for November will be announced.

Stocks to watch: DBS Vickers Securities recommends selective buying of stocks that will be added to the MSCI Index including BGRIM, GPSC, OSP and SAWAD. Joining the MSCI small-cap index are CENTEL, DOHOME, JMT, SPRC, STPI, TPIPP and TQM.

  • Tisco Securities recommends selective buying of dividend plays and stocks with good earnings prospects for Q1 next year, among them AP, BBL, KKP, MAJOR, QH, SCB, SCC and TVO. Stocks expected to gain if the country's credit rating is raised include BBL, KBANK, SCB, KTC and MTC; those expected to be targets of long-term equity funds (LTFs) and retirement mutual funds (RMFs) are AOT, BDMS, BJC, CPALL, PTT, BBL, KBANK and SCB.

Technical view: DBS Vickers sees support at 1,570 points and resistance at 1,610. Bualuang Securities tips support at 1,580 and resistance at 1,620.

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