Tech disappointment, inflation weigh on sentiment

Tech disappointment, inflation weigh on sentiment

Recap: Global stocks along with US futures dipped yesterday as investor sentiment soured after disappointing earnings reports from Wall Street tech giants, along with persistent concerns over inflation and monetary tightening.

The SET index moved in a range of 1,619.14 and 1,645.91 points this week before closing yesterday at 1,623.43, down 1.22% from the previous week, in daily turnover averaging 70.95 billion baht.

Retail investors were net buyers of 9.13 billion baht and brokerage firms bought 1.39 billion. Foreign investors were net sellers of 6.82 billion baht and institutional investors offloaded 3.69 billion baht worth of shares.

Newsmakers: US President Joe Biden on Thursday presented an updated spending plan that the White House believes can pass both the House and the Senate. It includes a 15% minimum tax on profits of US companies with over $1 billion in profits to help fund expanded social programmes.

  • US regulators on Tuesday terminated the authorisation for the American subsidiary of China Telecom to do business in the United States, citing "significant" national security risks.
  • Tesla Inc crossed $1 trillion in market value on Monday, joining a select group of companies after its stock price more than doubled this past year on surging electric vehicle sales and rising profits.
  • General Motors and Ford reported lower profits on Wednesday as a global semiconductor crunch dented sales, prompting both US auto giants to caution that shortages would persist into 2022.
  • Facebook reported a 17% jump in quarterly net profit to $9.2 billion, even as it faces a public relations crisis over damning disclosures by a former employee. It also unveiled the new corporate name "Meta" to reflect its metaverse ambitions, but the names of its core products are unchanged.
  • Shares of the embattled Chinese developer Evergrande rose on Monday after it said it had resumed work on more than 10 projects, as it sought to soothe fears about its debt struggles.
  • Modern Land reported a missed payment on Tuesday, the latest Chinese property developer to do so, adding to worries about spiralling effects of the debt crisis at behemoth China Evergrande and dragging on shares in the sector.
  • The US pharmaceutical firm Merck says its Covid antiviral pill molnupiravir could bring in as much as US$7 billion in global sales through 2022 if approvals go ahead.
  • AirAsia Group says it has partnered with more than 20 airlines as it builds up its Super App into an online travel agency that also sells flights by competitors.
  • Bitcoin has slid back below $60,000 as euphoria over the first US crypto ETF dissipated and traders took profits following a record-breaking rally that drove the price close to $67,000 two weeks ago.
  • The Finance Ministry on Thursday lowered its GDP growth forecast to 1%, from 1.3% predicted in July. It's the ministry's fourth downward revision this year, reflecting the widespread damage done by the third Covid-19 wave that began in April.
  • Thailand's exports rose more than expected in September, up 17.1% from a year earlier, following 8.9% growth in August, helped by trade partners' economic recovery, a weak baht and government trade promotion, Commerce Minister Jurin Laksanawisit said.
  • The Bank of Thailand has extended a corporate bond stabilisation fund to the end of 2022 as the coronavirus situation remains highly uncertain.
  • The Industry Ministry expects to revise its manufacturing production index (MPI) growth forecast for 2021 up from 4-5% next month, amid more positive economic sentiment. The index in September contracted by 1.3%, which was less than expected.
  • Foreign business confidence has recovered, as foreign investors are feeling upbeat about the country's prospects thanks to the imminent reopening to foreign tourists and increasing vaccine coverage.
  • The Ministry of Digital Economy and Society (DES) has urged tax agencies to consider a waiver of capital gains tax for venture capital (VC) funds investing in local tech startups, to help spur startup investment.
  • The cabinet has approved a draft decree to regulate digital platform businesses, local and foreign, to ensure financial and commercial stability and prevent damage to the public. It would cover the likes of online marketplaces, social commerce, food delivery, space sharing, ride/car sharing and search engines.
  • The government has been urged to simplify money transfers and provide more medical staff to support wealthy pensioners if the country wants to boost the economy through foreign property ownership.
  • State-run financial institutions stand ready to provide liquidity to around 175,000 business operators in the Eastern Economic Corridor (EEC) to help them deal with the impact of the pandemic.
  • Tourism operators have called for reciprocity on Thailand's reopening scheme, which covers 46 countries, urging the government to launch travel bubbles with other countries to completely remove quarantine on both sides.
  • Tourism operators in major destinations want to see more countries on the quarantine-free list, particularly Russia and India, to drive high-season demand.
  • The new Tour Teaw Thai programme, which subsidises 40% of tour package costs up to 5,000 baht for one million people, has received lukewarm feedback from travellers and tour operators despite the start of new travel season.
  • About 300,000 foreign tourists are expected to visit Bangkok in each of the next two months after the capital reopens on Monday, the Tourism Authority of Thailand says.
  • The Finance Ministry stands ready to approve measures to promote the use of electric vehicles (EV), which is expected to significantly bring down the prices of imported EVs, according to a source on the National Electric Vehicle Policy Committee.
  • Central Retail Corp, the country's biggest shopping centre developer, is piloting a digital currency among its 80,000 employees, with plans to expand the offering to customers and the public once the so-called sandbox phase is complete.
  • Rabbit Cash, a joint venture of three major companies including the financial services firm Aeon Thana Sinsap, has launched digital lending services to support financial inclusion, targeting both salaried workers and freelancers.
  • Robinhood, the no-commission food delivery platform developed by Siam Commercial Bank (SCB), plans to raise funds next year and launch three non-food services, aiming to become a regional "super application".
  • Third-ranked mobile carrier Total Access Communication (DTAC) said third-quarter net profit fell 41% year-on-year to 832 million baht, amid a drop in consumer purchasing power and closure of its shops during the Covid lockdown.

Coming up: Australia, China, Britain and the US will release October manufacturing PMI on Monday. The Reserve Bank of Australia will announce its policy rate decision on Tuesday. Germany and the euro zone will release October manufacturing PMI.

  • New Zealand on Wednesday will release third-quarter employment data and Britain will release October composite and services PMI. Due the same day is US non-manufacturing PMI.
  • The US Federal Reserve will hold a briefing on its policy meeting early Thursday Thailand time. The Bank of England will also announce its latest rate decision on Thursday. The US will release October nonfarm payrolls and unemployment on Friday.

Stocks to watch: Asia Plus Securities recommends stocks set to recover faster than others as the economy reopens, such as AOT and CPALL. For medium-term plays with supporting factors, it recommends VNG.

  • Kingsford Securities expects the SET Index to move in a narrow range next week as investors await the results of the Fed meting. It recommends defensive stocks such as GULF, BGRIM, GPSC, EA, BDMS, BH, ADVANC, SCGP, CPN and HMPRO and banking, oil refinery and retail stocks that will gain from economic reopening.

Technical view: DBS Vickers Securities sees support at 1,600 points and resistance at 1,640. Thanachart Securities sees support at 1,617 and resistance at 1,641.

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