Biden tax plan keeps lid on equity enthusiasm

Biden tax plan keeps lid on equity enthusiasm

Recap: Global shares steadied yesterday around 1% below record highs reached earlier in the week week after US President Joe Biden announced a plan to raise taxes on the wealthy. European shares were mixed as a surge in global coronavirus cases offset optimism about a strong earnings season.

The SET index moved in a range of 1,550.62 and 1,587.95 points this week before closing yesterday at 1,553.59, up 0.3% from the previous week, in daily turnover averaging 90.02 billion baht.

Retail investors were net buyers of 10.17 billion baht and brokerage firms bought 838.09 million baht. Foreign investors were net sellers of 8.71 billion baht and institutional investors sold 2.29 billion baht worth of shares.

Newsmakers: President Biden on Thursday doubled US climate ambitions as he hosted an Earth Day summit, promising to cut greenhouse gas emissions by 50-52% by 2030 from 2005 levels. That compares with the 26-28% set by Barack Obama. The summit features 40 world leaders including Xi Jinping of China.

  • The US economic recovery is accelerating as stimulus money, Covid vaccinations and business reopenings spur a spring surge in consumer spending, a sharp pullback in layoffs and a bounceback in factory output.
  • Stock investors were rattled by reports that President Biden plans to propose almost doubling the capital gains tax rate for those earning $1 million a year or more, to 39.6%, to help pay for his ambitious economic agenda.
  • European Central Bank chief Christine Lagarde on Thursday underlined the ECB's commitment to cheap money, saying there had been no talk of scaling back bond-buying to support the economy.
  • The US on Wednesday imposed new Myanmar-related sanctions, targeting two military-linked state businesses exporting lumber and pearls.
  • Oil prices climbed yesterday, buoyed by hopes that demand will recover as economic growth picks up, but worries about India's surging second wave of Covid cases limited gains.
  • A cryptocurrency that was created as a joke exploded into plain view on Wall Street on Monday, with a surge in dogecoin sending its 2021 return above 8,100% -- more than double the gains on the S&P 500, including dividends, since 1988.
  • India is still holding consultations on a proposed law that would ban cryptocurrencies, except for one developed by the central bank. The Electronic Frontier Foundation and others have criticised the plan, saying cryptocurrencies could help promote financial inclusion.
  • The euro zone recovery is fully under way with services returning to growth and manufacturing expanding at a record pace, according to purchasing managers' indices for April.
  • Microsoft Corporation will invest US$1 billion over the next five years in Malaysia as part of a new partnership programme with government agencies and local companies, the country's prime minister said on Monday.
  • Prime Minister Prayut Chan-o-cha said he had received personal assurances from Russian President Vladimir Putin that Sputnik V coronavirus vaccine wold be sold to Thailand. US-based Pfizer has also agreed to sell Thailand 10 million doses, the government says.
  • Business leaders on Wednesday plan to ask Gen Prayut to allow the private sector to import 5 million vaccine doses by the end of this year.
  • GDP growth may dive to just 1.6% this year if the government fails to stimulate the economy reeling from the third wave of the pandemic, says the University of the Thai Chamber of Commerce (UTCC). It puts losses from the third wave at up to 100 billion baht a month, mainly in the service sector.
  • The ongoing Covid outbreak will cause a setback to plans to reopen Phuket to foreign tourists as 2021 GDP growth is likely to decrease by anywhere from 1.5% to 3%, the Joint Standing Committee on Commerce, Industry and Banking predicts.
  • The Thai economy could lose 100 billion baht a month, mainly in the service sector, as a consequence of the latest outbreak of Covid-19, the University of the Thai Chamber of Commerce said on Thursday.
  • The Tourism Council of Thailand estimates unemployment in the industry in the second quarter could reach between 2 million and 2.5 million as reopening plans might be delayed if the government cannot flatten the virus curve within a month.
  • Finance Minister Arkhom Termpittayapaisith warns that many Thai people risk an uncomfortable retirement as nearly 40% of the population is prone to spend rather than saving.
  • The cabinet has approved expanding the coverage of the Rao Chana (We Win) financial aid scheme to an additional 2.4 million people and also extended the deadline to spend a 7,000-baht cash handout to June 30.
  • The takeover bid by the power producer Gulf Energy Development for InTouch Holdings Plc casts uncertainty over the shareholding structure of mobile market leader and InTouch subsidiary Advanced Info Service, Fitch Ratings has said. Gulf says it is ready to apply for a short-term loan worth 150 billion baht to fund its acquisition.
  • The government has agreed to extend excise tax reductions for jet fuel until the end of the year, a move to help mitigate the plight of airlines hard hit by Covid.
  • The Office of Trade Competition Commission (OTCC) will step up inspections of business mergers and acquisitions and closely watch the e-commerce sector this year to ensure fair trade, since the pandemic may change the market structure with small and medium-sized enterprises disappearing.
  • The US tech giant Dell Technologies is gearing up to expand hybrid cloud services in Thailand to capitalise on the country's burgeoning cloud computing market, which is expected to reach 15 billion baht in value by 2024.

Coming up: Germany will release the April business climate index on Monday and the US will release March durable goods orders. Japan will announce an interest rate decision on Tuesday, and the US will release April consumer confidence and February house prices.

  • Thailand will release March industrial production on Wednesday and Australia will release first-quarter consumer prices. Germany will release the May consumer climate, and the US and Canada will release February retail sales.
  • The US Federal Reserve will announce the results of its policy meeting on Thursday. Germany will release April inflation and unemployment data and the US will release preliminary first-quarter GDP data and March pending home sales. Thailand will release March trade, current account, private investment and consumption figures on Friday. The same day, China will release April manufacturing PMI and Germany will release first-quarter GDP data.

Stocks to watch: Asia Plus Securities expects foreign funds will flow into Asian markets including Thailand for the next few weeks as the US dollar continues to weaken. The currency has depreciated by 2.14% so far this year, affected by plans for $2.3 trillion in infrastructure spending and a proposed hike in the corporate tax rate from 21% to 28% that will pressure US firms' profits. The brokerage also recommends stocks that will benefit from the world economic recovery including TMT, KSL and PTTEP.

Capital Nomura Securities (CNS) recommends stocks that will outperform in the second quarter such as HANA, KCE, SAWAD, RATCH, GPSC, INTUC, BDMS, ICHI, SAPPE, HMPRO, GLOBAL, KKP and SPALI. It recommends allocating 45% of a portfolio to low-risk and alternative assets to diversify risk.

Technical view: Finansia Syrus Securities sees support at 1,530 points and resistance at 1,600. Thanachart Securities sees support at 1,550 and resistance at 1,585.

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