Evergrande drama keeps investors on sidelines

Evergrande drama keeps investors on sidelines

Recap: US equity futures and European shares dropped and sovereign bond yields in Europe climbed as uncertainty around the fate of debt-plagued China Evergrande Group dented investor sentiment. Gold prices edged higher after a 1% drop in the previous session, spurred by a subdued dollar.

The SET index moved in a range of 1,591.81 and 1,637.65 points this week before ending the holiday-shortened week on Thursday at 1,631.15, up 0.34% from the previous week, in daily turnover averaging 97.12 billion baht.

Foreign investors were net buyers of 3.17 billion baht and retail investors bought 308.18 million baht. Institutional investors were net sellers of 3.42 billion baht and brokerage firms offloaded 54.46 million baht worth of shares.

Newsmakers: A key interest payment deadline passed on Thursday without any word from China Evergrande, as global markets watched for signs of default. The embattled Chinese developer said on Wednesday it had made a deal with domestic bondholders to avoid default but gave no other details.

 

  • Chinese authorities have asked local governments to prepare for the potential demise of China Evergrande, The Wall Street Journal reported on Thursday, citing officials familiar with the discussions.
  • Bitcoin prices fell 5.5% yesterday after China's central bank said all cryptocurrency-related transactions are illegal and must be banned. The warning from the People's Bank of China includes services provided by offshore exchanges to domestic residents.
  • The US Federal Reserve signalled it is on track to start scaling back its asset purchases this year, but left the door open to extend stimulus if the US economy needs it. Much could depend on whether the September employment report is "decent", said chairman Jerome Powell.
  • The United States is easing Covid travel bans and will require foreign nationals seeking to fly to the US to show proof of vaccination under new rules aimed in part at assuaging mounting frustration among European allies.
  • An American solar panel manufacturer has called on the US Department of Commerce to scrutinise 14 factories in Thailand, Vietnam and Malaysia over allegations that they engaged in prohibited rerouting of exports from China that would otherwise be subject to far higher US taxes.
  • The Asian Development Bank warned of "lasting scars" from the pandemic as it cut its 2021 growth forecast for developing Asia in light of slow vaccination rates, surging infections and crippling lockdowns.
  • Indonesia's central bank left its benchmark interest rate unchanged at a record low as the economy begins to show signs of recovery from the country's worst coronavirus wave.
  • Oil prices were poised for a fifth weekly gain, with Brent futures trading at a three-year high, as the market tightened amid a global shortfall, even as Opec and its allies add more supply.
  • The Finance Ministry will pump additional money into the economic system in the fourth quarter to further improve the flagging economy.
  • The cabinet on Tuesday approved a further 27 billion baht in relief measures and extended a scheme to boost domestic travel to the end of February.
  • The Federation of Thai Industries (FTI) said the government needs to borrow an additional 1 trillion baht to help boost the economy next year as the slow recovery from Covid continues.
  • The government should not have a problem repaying public debt, even if it borrows more in the future, says Finance Minister Arkhom Termpittayapaisith. He was commenting on a proposal to lift the public debt ceiling to 70% fo GDP from 60%.
  • State-owned enterprises are projected to rev up their investments during 2023-2025 after the Covid-19 outbreak eases.
  • Confusion over reopening timelines -- Oct 1? Oct 15? Nov 1? -- has spoiled the chance for the tourism industry to rebound during the coming high season, say industry executives. International tour operators are holding off on offering packages until policies are confirmed.
  • Hua Hin is likely to be the only one of the five destinations scheduled to reopen to vaccinated tourists on Oct 15 as it has reportedly reached the required inoculation rate of 70% for residents.
  • The Bangkok Metropolitan Administration has no plan to reopen to foreign tourists on Oct 15 and won't even discuss the matter until 70% of residents are fully vaccinated, says governor Aswin Kwanmuang.
  • The Tourism Department has increased its revenue target from foreign film productions to between 3.2 billion and 3.5 billion baht after launching incentives for big productions in the hope of returning to pre-pandemic levels by next year.
  • The value of Thai exports rose by a smaller-than-expected 8.9% year-on-year in August, after a 20.2% spike in July from the low base of the year before. Commerce Minister Jurin Laksanawisit said earlier that the August figure would be lower but that momentum remained good.
  • Thailand's handicraft exports are expected to grow by nearly 20% this year, driven by increasing demand for silverware, gold products and ornaments.
  • The Customs Department is preparing to lower import duty on alcoholic beverages and cigars by 50% for five years as part of its plan to woo wealthy foreigners to invest and live in Thailand.
  • The government is upbeat about trade prospects with China after partnerships were deepened via "mini-FTAs" signed with Hainan province in late August.
  • Thailand needs to re-evaluate the impact of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), now that China has formally applied to join the group, says Auramon Supthaweethum, head of the Trade Negotiations Department.
  • Thailand has set an ambitious plan to jump into the top 30 in the Global Innovation Index (GII) by 2030. The country climbed one place to 43rd in the 2021 index released by the World Intellectual Property Organisation.
  • The National Cybersecurity Agency has confirmed the personal data of 106 million international travellers to Thailand was exposed online last month, but was quickly secured by authorities, with no data sold on underground websites.
  • The global tech powerhouse Huawei has signed a two-year memorandum of understanding with Thailand's Department of Medical Services (DMS) to enhance the country's medical services using 5G-powered technologies.
  • Siam Commercial Bank (SCB) aims to become a major digital platform service provider under its planned new parent, SCB X, as well as a regional financial tech conglomerate by 2025, with a goal of 200 million customers.
  • Advanced Info Service (AIS), the country's largest mobile operator by subscriber base, is teaming up with Siam Commercial Bank (SCB) on digital lending, which has seen a tremendous surge in demand.
  • Cash-strapped Thai Airways International (THAI) is putting three aircraft along with a flight simulator up for sale, as a part of its financial rehabilitation plan and the ongoing push to modernise its ageing fleet.

Coming up: The US will release August core durable goods orders on Monday. Australia will release August retail sales on Tuesday. Canada will release August raw materials prices on Wednesday and the US will release August pending home sales.

 

  • Japan will release August industrial production on Thursday and China will announce September manufacturing PMI. Germany and the euro zone will release September unemployment, and the US and Britain will release revised second-quarter GDP.
  • Japan will release the third-quarter tankan sentiment index on Friday. The euro zone, Germany and Britain will release September manufacturing PMI. The US will release August personal consumption expenditure and September manufacturing PMI.

Stocks to watch: Maybank Kim Eng Securities says the expected ending of the emergency decree next week would be positive for banking stocks, notably KBANK with its large SMEs customer base and SCB, which has announced a joint venture with ADVANC to provide digital lending. Other large bank stocks with positive sentiment include BBL, BAY and KTB.

  • Maybank Kim Eng says easing concerns about China Evergrande and clarity about the Fed's tapering plan will be positive for energy stocks such as PTT and PTTEP.
  • Globlex Securities recommends tourism-related stocks that will benefit from a stimulus package in the fourth quarter, including AOT, MINT, ERW, CENTEL and ASAP. The coming revision of SET50 and SET100 index calculations will pressure DELTA, NRF, PSL and INTUCH, and benefit BBL, SCB, KBANK and TISCO.

Technical view: DBS Vickers sees support at 1,590 points and resistance at 1,640. Finansia Syrus Securities sees support 1,600 and resistance at 1,650.

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