Easing US-China trade friction cheers investors

Easing US-China trade friction cheers investors

Recap: Global stocks rose as investors cheered the latest breakthrough in trade negotiations between America and China and the start of stimulus talks in Europe. Optimism about further reopening of economies offset worries about new cases in China and some other countries.

The SET index moved in a range of 1,338.25 and 1,381.00 points this week before closing yesterday at 1,370.82, down 0.9% from the previous week, in daily turnover averaging 71.4 billion baht.

Retail investors were net buyers of 10 billion baht, institutional investors bought 4 billion and brokerage firms purchased 32.2 million worth of shares. Foreign investors were net sellers of 14 billion.

Newsmakers: The steroid dexamethasone was shown on Tuesday to be the first drug to significantly reduce the risk of death among severe Covid-19 cases, in trial results hailed as a "major breakthrough" in the fight against the disease.

  • Beijing said it was facing an "extremely severe" coronavirus threat from new infections centred on a fresh market, while New Zealand reported its first new infections in almost a month.
  • Travellers from Thailand, Vietnam, Australia and New Zealand could be the first to be allowed into Japan once restrictions are ended, the Tokyo government said this week, without specifying a timetable.
  • China moved closer on Thursday to passing a controversial national security law for Hong Kong that has raised international concerns that it will end the financial hub's limited freedoms.
  • British Prime Minister Boris Johnson said he believed stuttering post-Brexit trade talks could conclude by as early as next month, after a meeting with EU chiefs that saw both sides commit to ramping up negotiations.
  • The British energy giant BP said it would take a hit of up to $17.5 billion in the second quarter as "sustained" coronavirus fallout ravages global oil demand.
  • The ride-hailing, food delivery and payments firm Grab is expected to cut 5% of its staff or around 300 people.
  • Facebook on Monday rejected calls from the Australian government and news companies that it share advertising revenue with the media, suggesting it would rather cut news content from its platform.
  • The ban on commercial international flights might not be lifted on July 1 as originally planned, according to the Civil Aviation Authority of Thailand. If and when the ban is scrapped, businesspeople will likely be the first allowed to travel.
  • The Tourism Council of Thailand is crying foul over the 22.4-billion-baht tourism stimulus package, saying it will mostly benefit big hotel operators and leave behind the small and medium-sized businesses that account for 75% of the sector.
  • The Tourism Authority of Thailand's China office is tempering enthusiasm that many Chinese tourists will visit in the second half as travel restrictions ease. It says low Chinese purchasing power persists and an uptick in new infections has emerged in Beijing.
  • Thailand's car exports fell 35% year-on-year in the first five months of 2020 to 158.7 billion baht in value, pressured by the global economic slowdown and travel restrictions.
  • The Thai economy is forecast to shrink by 6.5% this year as the pandemic takes a toll on domestic consumption and investment and pummels outbound merchandise and services trade, says the Asian Development Bank.
  • Thailand has fallen four places to 29th in the IMD world competitiveness rankings for 2020, weighed down by a decline in rankings for economic performance and government efficiency.
  • The annual interest rate on credit card loans will be cut to 16% from 18% as part of a plan announced by the Bank of Thailand to ease the economic hardship of the public resulting from the pandemic. A three-month blanket debt holiday is expiring at the end of this month.
  • Thai investors can take complete ownership of service businesses in Japan after the recent ratification of the first protocol to amend the Asean-Japan Agreement on Comprehensive Economic Partnership (AJCEP).
  • The Bank of Thailand has announced a project to develop a prototype payment system for businesses using the Central Bank Digital Currency (CBDC), which will build on knowledge from the central bank's Project Inthanon.
  • Despite rock-bottom interest rates, more than 1 trillion baht flowed into 10 SET-listed banks at the end of April from the end of 2019, indicating an increasing appetite for safe-haven deposit accounts even as the pandemic spiralled during that period.
  • The Energy Ministry has cut the ex-refinery oil price by 50 satang a litre and will continue to subsidise gas purchases to provide relief to an economy battered by Covid-19.
  • There are four candidates to replace outgoing governor Veerathai Santiprabhob as the Bank of Thailand's 24th chief, says Rangsan Sriworasart, the selection committee chairman. Two are central bank insiders and two are outsiders, he said without revealing any names.
  • Thailand's e-commerce market is expected to surge 35% to 220 billion baht in value this year as online shopping ix spurred by a lengthy lockdown, says the regional e-commerce platform Lazada.
  • Airports of Thailand (AOT), which manages six airports including Suvarnabhumi, said it expects passenger numbers and revenue to fall by 50% in 2020 and 42.2% in 2021 as a result of the coronavirus crisis.
  • The SET-listed developer Property Perfect Plc (PF) is slashing new residential project launches this year to three from 12 to save expenses amid a market slowdown.
  • Thai Oil Plc (TOP) has issued US$1 billion in debentures or senior unsecured notes to foreign institutional investors in a bid to maintain cash on hand and continue development projects in the pipeline during the economic downturn.
  • Siam Commercial Bank (SCB) has given assurances that its strong capital buffer with a capital adequacy ratio of 17.8% is sufficient to handle rising bad loans.
  • Nippon Paint Decorative Coatings (Thailand) Co, Asia's largest paint maker, is struggling to recover from the severe impact of Covid-19, which caused its revenue to fall by 10% in the first quarter.

Coming up: The People's Bank of China will announce the one-year prime loan rate on Monday and Germany will release the June Ifo business climate outlook on Wednesday.

  • Germany will release July consumer confidence on Thursday and the US will release final Q1 GDP data and May durable goods orders. US personal income and spending updates are due on Friday.

Stocks to watch: Capital Nomura Securities says KTC, SAWAD, TISCO and KKP will be affected by a Bank of Thailand directive to cut credit-card interest rates to 16% from 18%, along with rates on other loans, to ease the economic shock of the pandemic. BEM and BTS are stocks poised to gain from the end of lockdown measures and the curfew.

  • UOB Kay Hian Securities Thailand recommends accumulating shares of firms expected to report good Q2 results, among them ACC, IVL, AJ, PTL, TIP, THRE and STA. Defensive picks are ADVANC, INTUCH, RATCH and SSP.

Technical view: Maybank Kim Eng Securities Thailand sees support at 1,340 points and resistance at 1,385. DBS Vickers Securities Thailand sees support at 1,320 and resistance at 1,385.

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