Equities retreat as Omicron spreads

Recap: Global stock markets retreated yesterday as concerns over the Omicron coronavirus variant and a wave of new restrictions grew, while investors are looking ahead to US consumer inflation numbers and key central bank meetings next week for clues on the direction of monetary policies.

The SET index moved in a range of 1,595.14 and 1,623.82 points this week before closing on Thursday at 1,618.23, up 1.89% from the previous week, in daily turnover averaging 71.3 billion baht for three trading days.

Institutional investors were net buyers of 4.54 billion baht and brokers bought 212.43 million baht. Retail investors were net sellers of 2.87 billion baht and foreign investors offloaded 1.89 billion baht worth of shares.

Newsmakers: Two major Chinese property firms, Evergrande and Kaisa Group, have defaulted on $1.6 billion worth of bonds to overseas creditors, Fitch Ratings said on Thursday, as contagion spreads within the country's debt-ridden real estate sector. Evergrande is now preparing for a major restructuring in which the government will call most of the shots.

• US senators struck a deal on Tuesday to create a one-time law allowing Democrats to lift the country's borrowing limit and avert a catastrophic credit default without requiring votes from the opposition Republicans.
• Vietnam and Taiwan again exceeded the US Treasury's thresholds for possible currency manipulation, while Thailand is still one of 12 countries on its "monitoring list."
• The share of household wealth owned by billionaires has risen by a record amount during the pandemic, with millionaires also coming out of Covid-19 ahead, a study found.
• Britain on Thursday said it had agreed on a digital trade deal with Singapore, the first digitally focussed trade pact signed by a European nation.
• Kirin Holdings of Japan has filed for arbitration to terminate its brewery joint venture partnership with Myanma Economic Holdings Public Co, calling for a "fair and just" process to end its deal with the Myanmar military-linked entity.
• Foreign investors have been dumping Vietnamese stocks all year, analysts say, as they pursue better returns from popular retail stocks like Tesla, as well as cryptocurrencies.
• Oil prices have rallied after a rout in the previous week, gaining about 6% amid confidence that the rapid spread of the Omicron variant would not hit global growth and fuel demand.
• Gold prices were poised for a fourth straight weekly decline, as strong US jobs data bolstered the case for an early unwinding of Federal Reserve stimulus.
• A nascent recovery in Asia-Pacific international travel demand has been set back by the Omicron variant as governments tighten rules, but airline bosses say they hope any backward moves will be short-lived.
• The Thai economy is not expected to return to pre-Covid levels until the first quarter of 2023, Bank of Thailand Governor Sethaput Suthiwartnarueput told a business forum on Thursday, acknowledging that the recovery will be slower than some other countries in the region.
• Thailand is on course to achieve economic growth of around 1.2% this year, said government spokesman Thanakorn Wangboonkongchana, adding the economy is likely to grow by 3.5% to 4% next year.
• Siam Commercial Bank has downgraded its 2022 economic growth forecast from 3.4% to 3.2%, as the Omicron variant is expected to take a toll on the global economy and delay Thailand's tourism recovery.
• Consumer confidence rose for the third straight month in November, hitting a seven-month high driven by an easing of Covid restrictions, robust export growth and the economic and tourism reopening.
• Rising product prices based on higher demand and persistently high oil prices are expected to drive headline inflation to grow by 0.7% to 2.4% (an average of 1.5%) next year, from 0.8% to 1.2% this year, according to the Commerce Ministry.
• The government expects cross-border trade to grow by as much as 8-9% this year, propelled by the global economic recovery, baht weakness and ongoing efforts by the Commerce Ministry to speed up the reopening of border checkpoints.
• The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) has asked the government to increase the maximum interest rate for used car and motorcycle loans to encourage leasing companies to lend to lower-income earners.
• IT spending in Thailand is expected to grow by 6.4% year-on-year to 871 billion baht in 2022 with strong growth in enterprise software, driven by continued hybrid work and remote services, according to the global research firm Gartner.
• Thai travellers are shrugging off concerns about Omicron, with a recent survey indicating local tourists would generate 5.72 billion baht over the current long-weekend holiday.
• The government is preparing to increase incentives and ease regulations on foreign film shoots in Thailand, aiming to promote the potentially high-revenue business.
• The Public Debt Management Office is expected to issue another batch of government savings bonds, worth 70 billion baht, in the second quarter of next year to satisfy high demand, says director-general Patricia Mongkhonvanit.
• The Bank of Thailand has reiterated its concern about the use of digital assets to pay for goods and services because of their price volatility, as more local companies jump on the crypto bandwagon.
• Siam Piwat Co, the operator of Siam Center, Siam Discovery, Siam Paragon and Iconsiam, has teamed up with partners in 13 industries to launch a new digital platform, a bold move aimed to reach high-spending customers worldwide.
• The state-run Metropolitan Electricity Authority (MEA) plans to provide discounts on electricity to electric vehicle (EV) charging service providers.
• Ford Motor Co said on Wednesday that it would invest $900 million to modernise its factories in Rayong that support production of its Ranger pickup and Everest SUV, in what will be the American automaker's largest single investment in the country.
• Siam Cement Group (SCG), the country's largest industrial conglomerate, vows to spend 70 billion baht on technological innovations to cut carbon dioxide emissions from its manufacturing by 20% within 2030.

Coming up: Japan will release fourth-quarter large non-manufacturing and manufacturing indices on Monday. On Tuesday, Britain will release October average earnings and unemployment data on Tuesday, the euro zone will release October industrial production and the US will release November producer prices.

• China will release November industrial production data on Wednesday, Britain and Canada will release November consumer prices and the US will release November retail sales and the export and import price index.
• The European Central bank will hold its policy meeting on Wednesday. The Federal Open Market Committee will announce its policy interest rate decision and economic projections on Thursday (early Friday Thailand time). Germany will release the December business climate index on Friday and the euro zone will release November consumer prices.

Stocks to watch: SCB Securities recommends investing 25% in stocks linked to global reopening as prices have dropped because of Omicron worries. Picks include MINT, CRC, AOT and TOP. For domestic reopening stocks, the broker recommends KTC, CPN, BEM, BTS, ZEN and M. Among blue chips, it recommends KBANK, GPSC, INTUCH and SPALI.

• UOB Kay Hian Securities suggests holding around 50% of one's portfolio in cash and the rest in ICT and consumer stocks. Its top picks are ADVANC, DTAC, FTREIT, WHART, GULF, GPSC, EGCO, RATCH, EASTW, WHAUP, TTW, KBANK, CPALL, KTB, SCB, AOT, MINT, KCE, HMPRO and CPN. Stocks that could benefit from an upturn in Covid cases are BCH, CHG, STA, STGT, SMD and WINMED. However, investors should be wary of profit-taking as Omicron may have limited impact on the economy.

Technical view: SCB Securities sees support at 1,575 points and resistance at 1,625. DBS Vickers Securities sees support at 1,580 and resistance at 1,630.