US stimulus signals cheer equity investors

US stimulus signals cheer equity investors

Recap: Global stocks surged, with Asian markets nearing two-and-a-half-year highs, buoyed by White House signals that it is open to large-scale stimulus of the US economy, and expectations of a Democratic victory in the presidential election on Nov 3.

The SET index moved in a range of 1,239.06 and 1,282.65 points this week before closing yesterday at 1,267.14 points, up 2.4% from the previous week, in daily turnover averaging 51.13 billion baht.

Institutional investors were net buyers of 3.94 billion baht, retail investors bought 3.11 billion baht and brokers purchased 627.14 million baht worth of shares. Foreign investors were net sellers of 7.67 billion baht.

Newsmakers: With Europe topping 6 million coronavirus cases, Scotland and Brussels became the latest to introduce curbs on alcohol consumption, while Paris bars and cafes will shut for two weeks as the city was placed on maximum alert.

  • US Treasury Secretary Steven Mnuchin has told House Speaker Nancy Pelosi that President Donald Trump wants agreement on a "comprehensive" aid package to shore up the American economy. Talks over stimulus funds have been deadlocked for weeks, with Republicans saying the Democrats want to spend too much.
  • Gold futures jumped more than 1% yesterday en route to a second straight weekly gain, as the dollar weakened and renewed negotiations for US stimulus prompted investors to buy bullion as a hedge against inflation.
  • President Donald Trump was back at work in the Oval Office on Wednesday, just six days after testing positive for Covid-19, despite warnings that his return could put others at risk. Yesterday his doctors said he was free of the disease and could resume public activities.
  • Mike Pence and Kamala Harris went head to head in the US vice presidential debate, sparring over issues including the Trump administration's response to the coronavirus, taxes and health care.
  • Facebook has announced a ban on all accounts linked to the QAnon conspiracy group, as the social network tries to clamp down on misinformation ahead of the heated US presidential election.
  • Twitter has taken down an "information operations" network of the Thai army as part of a global crackdown against political disinformation.
  • A Chinese experimental coronavirus vaccine being developed by the Institute of Medical Biology was shown to be safe in an early stage clinical trial, researchers said.
  • Singapore hopes to start "cruises to nowhere" in a bid to revive its coronavirus-hit tourism industry, but critics have warned against a risky move that could spark Covid-19 outbreaks.
  • Thousands have taken to the streets of cities across Indonesia in the past three days to protest against a new law they say undermines labour rights and weakens environmental protections.
  • Samsung Electronics flagged a leap of nearly 60% in third-quarter operating profits on Thursday, as its mobile and chip business were boosted by US sanctions against its Chinese rival Huawei.
  • His Majesty the King has endorsed the appointment of Arkhom Termpittayapaisith as the new finance minister, ending the month-long vacancy left by the sudden resignation of his brief predecessor Predee Daochai. The former National and Economic and Social Development Council secretary-general was previously a transport minister for the post-coup administration.
  • The government will give a tax deduction of up to 30,000 baht on purchases of goods and services from Oct 23 to Dec 31, pending cabinet approval. Books and items under the One Tambon One Product project are included -- but alcohol, cigarettes, lottery tickets, petrol, accommodation and air tickets are excluded.
  • Thailand's economy will face a daunting recovery trajectory if tourism does not improve, as economic growth is tied directly and indirectly to foreign tourist arrivals, says Fitch Ratings.
  • Some 50% of Thais agree with a plan to reopen the country for specific groups of tourists, says the Tourism Council of Thailand, while domestic tour operators are proposing inclusive measures to the government.
  • The Thai Bond Market Association has proposed the creation of a state fund worth 50 billion baht to guarantee debentures for the tourism industry, aiming to improve liquidity for hard-hit businesses.
  • With the US presidential election fast approaching, geopolitics will remain a factor causing turbulence in stock and bond markets worldwide until early November, says the Stock Exchange of Thailand.
  • The consumer price index fell for the seventh straight month in September, primarily driven by a decrease in energy prices, especially retail gasoline and electricity bills.
  • Consumer sentiment fell for the first time in five months in September, as people remained concerned about political instability, the slow economic recovery and higher unemployment as a result of the pandemic.
  • Cross-border trade, including transit trade, fell by 7.42% year-on-year in the first eight months, mainly attributed to the impact of the pandemic and a slowing economy.
  • The Eastern Economic Corridor Policy Committee has approved feasibility studies on three new projects worth a combined 1.18 trillion baht, aiming to create connectivity between the government's flagship EEC and regional industries.
  • The Bank of Thailand is asking financial institutions to monitor borrowers' debt servicing ability as the second-phase debt relief measure is set to expire this month, says GH Bank president.
  • A shippers' group forecasts Thai exports to fall by 8% this year, slightly better than the 10% contraction predicted in July, due to a gradual recovery in global demand.
  • Business leaders are urging an extension of credit guarantees provided to small and medium-sized enterprises under the 500-billion-baht soft loan scheme, expanding from two years to 10 years to help them.
  • Japanese expatriates living in Thailand, comprising the largest expat population at 18% of the total, declined this year while Chinese and Filipino expats are on the rise, according to the real estate consultancy CBRE. Chinese expats increased in line with Chinese manufacturing moving to Thailand because of the US-China trade war, while Filipino expats rose as demand spiked for English-fluent teachers.
  • Thailand's smartphone market is expected to decline 20% this year as the pandemic takes a toll on customer sentiment and 5G-enabled smartphone adoption, says the Chinese smartphone maker Oppo.
  • Fulcrum Ventures, a joint venture property firm comprised of a Thai investor and Singaporean investment group, is focused on low-rise housing projects in Bangkok as it freezes a new hotel development in Phuket because of the pandemic.
  • SET-listed Gulf Energy Development, the country's top power generation firm by capacity, has increased its stake to 10% in InTouch Holdings, up from 7.99%.
  • PTT Plc, the national oil and gas conglomerate, expects its domestic and international oil trade will return to pre-Covid-19 volumes next year, as it recorded 1.4 million barrels of oil equivalent per day in 2019, with a decline of 8-10% predicted for this year attributed to the pandemic.

Coming up: Britain will announce September unemployment on Tuesday, Germany will release the October economic sentiment index and the US will announce September inflation. Australia will release October consumer confidence on Wednesday.

  • China will release September inflation data on Thursday and the US will release September retail sales.

Stocks to watch: Capital Nomura Securities recommends stocks of companies that will benefit from new government measures to stimulate domestic consumption, such as HMPRO, CRC, ILM, MAKRO, SABINA, CPALL, SPVI, COM7 and JMART. Stocks with good prospects for third-quarter profit growth are TU, CPF, ICHI, HTC, WICE, BEM, SMT, KCE, HANA, XO and SAPPE. October portfolio recommendations include CPF, TU, KSL, KCE, SMT and XO.

UOB Kay Hian Securities Thailand suggests equities expected to show third-quarter profit growth, among them CKP and ZIGA. Firms that will benefit from government policies to support the tourism industry are ERW, CENTEL, MINT, VRANDA and SPA.

Technical view: Asia Plus Securities sees support at 1,250 points and resistance at 1,280. DBS Vickers Securities Thailand sees support at 1,200 and resistance at 1,290.



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