Global bourses rise on trade truce; SET tops 1,600

Global bourses rise on trade truce; SET tops 1,600

Recap: Riskier assets were in demand worldwide as Chinese economic growth data, along with easing trade tensions with the US, sent the MSCI world equity index up 0.2% and further into record territory.

The SET index moved in a range of 1,575.98 and 1,604.28 points this week before closing yesterday at 1,600.48, up 1.3% from the previous week, in turnover averaging 62.8 billion baht a day.

Retail investors were net buyers of 5.8 billion baht and brokerage firms bought 1.6 billion. Foreign investors were net sellers of 6.8 billion baht and institutional investors offloaded 543.5 million baht worth of shares.

Newsmakers: The US House of Representatives has submitted articles of impeachment against Donald Trump to the Senate, setting the stage for a trial starting on Tuesday, in which the Republican-led upper house will almost certainly acquit the president.

  • China's economy grew last year at 6.1%, its slowest pace in three decades and down from 6.6% in 2018, hit by weak domestic demand and trade tensions. However, the figure was in line with the government's target and market expectations.
  • After nearly two years of conflict between the world's top two economic powers, the US and China signed a trade truce, letting businesses around the world breathe a sigh of relief. Washington also removed the currency manipulator label it had imposed on China last summer.
  • President Hassan Rouhani appealed on Wednesday for "unity" and flagged the need for radical changes to the way Iran is run, after a wave of angry protests over the accidental downing of a Ukrainian airliner, on which all 176 people aboard were killed.
  • Russia's government resigned in a shock announcement on Wednesday after President Vladimir Putin proposed an overhaul of the constitution to strengthen parliament and weaken the presidency. While he must step down as president in 2024, he is expected to continue as leader for life, possibly in a new role heading a strengthened State Council.
  • A lack of information and transparency are top barriers for European companies seeking involvement in China's Belt and Road Initiative, according to a survey published on Thursday by the European Union Chamber of Commerce in China.
  • Nissan is "in no way" planning to end its partnership with Renault, the Japanese automaker insisted after a report suggested a divorce was possible in the wake of the Carlos Ghosn scandal.
  • Thailand again managed to avoid being placed on the US watch list for currency manipulation, while the Bank of Thailand affirmed that steps have been taken steps to curb the baht's gain with an almost US$80 billion increase in foreign reserves over the past five years.
  • Chinese investment applications in Thailand last year surpassed those made by Japanese companies for the first time, worth almost four times as much at 262 billion baht. Many of the Chinese applicants were seeking to avoid the impact of the US-China trade war, according to the Board of Investment secretary-general.
  • During the Chinese New Year festival from Jan 24 to 30, some 1.01 million foreigners are forecast to visit the country, up 1.5% from the seven-day festival last year. Tourism authorities expect spending in the period to rise 1.6% to 21.7 billion baht.
  • Negative factors including lower exports, widespread drought, baht strength, political uncertainty and poor business sentiment have prompted the University of the Thai Chamber of Commerce to lower its economic growth forecast to 2.8% for this year.
  • The 3.2-trillion-baht budget for 2020 is expected to be submitted for royal endorsement this month. The bill was passed last Saturday by the House of Representatives, three and a half months into the fiscal year that began on Oct 1. The Senate now has up to 20 days to consider the bill.
  • Finance Minister Uttama Savanayana on Monday ruled out a request by business leaders that policymakers set up a sovereign wealth fund as a means to curb the baht's strength.
  • The cabinet on Tuesday approved the merger of TOT and CAT Telecom and the formation of a new company, National Telecom, which will be 100% owned by the Finance Ministry.
  • Corporate debenture issuance is projected to remain high this year, while rollover risk is unlikely because most long-term debentures are certified with investment grades, says the Thai Bond Market Association.
  • The Securities and Exchange Commission expects to sign a memorandum of understanding with its Hong Kong counterpart on fast-tracking approval of cross-border investment in mutual funds by the second quarter.
  • The government is likely to let foreign investors put money into the Thailand Future Fund (TFFIF), a state-backed infrastructure fund, amid strong interest.
  • Thailand has received a score of 6 out of 10 for internet censorship, on a par with various regional peers, according to the UK-based tech research firm Comparitech.
  • The third-ranked mobile operator Total Access Communication Plc (DTAC) has appointed Sharad Mehrotra, the head of Telenor Myanmar, as its new chief executive, replacing Alexandra Reich.
  • Mazda Sales (Thailand) is worried the baht's appreciation and the cloudy domestic economy will affect automobile sales in 2020.
  • According to the Myanmar Times, Kasikornbank is looking to buy a 35% stake in Ayeyarwaddy Farmers Development Bank. The Central Bank of Myanmar has allowed foreign banks to hold stakes in local banks since January 2019.
  • Overall non-performing loans are expected to continue their rise this year as the downbeat outlook for the local and global economies persists, compounded by potential drought and the baht's strength, says a senior executive at Bangkok Bank.

Coming up: SET-listed Thai banks will continue releasing their fourth-quarter financial results, with Bank of Ayudhya, TMB Bank and LH Financial Group reporting on Monday. CIMB Thai Bank, Kasikornbank and Krungthai Bank will announce their earnings on Tuesday.

  • China will announce the one-year loan prime rate on Monday. Britain will announce December unemployment data on Tuesday and Germany will release the January ZEW economic sentiment index.
  • The Bank of Canada will announce its interest rate decision on Wednesday.
  • Australia will release January consumer confidence on Thursday and Japan will announce December trade figures. Japan will release December inflation data on Friday.

Stocks to watch: Tisco Securities recommends TASCO as the share price is supported by strong demand for government construction projects. Construction shares poised to see gains from public infrastructure spending are CK, STEC and SEAFCO. Banks expected to show a recovery in fourth-quarter net profit are BBL, KKP, KTB and TMB.

Merchant Partners Asset Management recommends investing in KCE, where orders for auto parts are likely to recover after a two-year decline. It also suggests CPF as the share price should gain from a pickup in prices of pork and other meats globally.

Technical view: Merchant Partners sees support at 1,580 points and resistance at 1,620. Trinity Securities sees support at 1,570 to 1,580 points and resistance at 1,620 to 1,630.

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