Shares retreat as central banks tighten up

Shares retreat as central banks tighten up

Recap: Global stocks, led by tech companies, traded mostly lower on Friday as concerns persisted about the global central banks' tighter monetary policies and economic risks from the Omicron coronavirus variant.

The SET index moved in a range of 1,616.51 and 1,646.85 points this week before closing yesterday at 1,641.73, up 1.45% from the previous week, in daily turnover averaging 77.85 billion baht.

Foreign investors were net buyers of 8.52 billion baht and brokerage firms bought 1.05 billion baht. Institutional investors were net sellers of 6.41 billion baht and retail investors offloaded 3.16 billion baht worth of shares.

Newsmakers: The US Federal Reserve says it will move more aggressively to quell the wave of price increases that has affected cars, housing, food and other goods and become a political liability for President Joe Biden. It will wind up its asset purchases by March, paving the way for two or three interest-rate increases in 2022.

  • Britain on Thursday became the first G7 economy to raise interest rates -- from 0.10% to 0.25% -- since the onset of the pandemic, citing inflation concerns. The European Central Bank took a small step in rolling back crisis-era stimulus, though ECB chief Christine Lagarde said a rate hike in 2022 was "very unlikely".
  • The US Senate voted on Tuesday to raise the federal debt limit, moving the country a step closer to eliminating the threat of a calamitous credit default -- just one day ahead of the deadline set by the Treasury.
  • The social media platform Reddit said Wednesday it has submitted a draft registration with the US Securities and Exchange Commission to go public on Wall Street. The size of the offering hasn't been determined, but a fundraising round this year valued the company at $10 billion.
  • Intel Corp announced plans for a $7.1-billion chip-packaging and testing factory in Malaysia, seeking to expand its global footprint and address a global semiconductor shortage it expects to persist until 2023.
  • Central banks in Indonesia and the Philippines held their key interest rates steady to help entrench economic recoveries that are picking up pace as Southeast Asia's worst Covid outbreaks recede.
  • The Chinese artificial intelligence start-up SenseTime postponed a planned $767-million IPO in Hong Kong after it was blacklisted by the US over human rights concerns in Xinjiang.
  • Climate-focused investors are pushing the six largest US banks to more quickly scale back financing of new fossil fuel development, drafting resolutions to push for shareholder votes at annual meetings in 2022, Reuters reports.
  • Gold prices were on track for their best week since mid-November as the dollar weakened after the Fed decided to speed up stimulus tapering, making the metal cheaper for holders of other currencies.
  • Thailand's economy is still expected to grow this year, but by only 1% due to the impact of Covid. Growth is expected to accelerate to 3.9% next year, driven by a recovery in service sector activity, the World Bank said on Tuesday.
  • The Bank of Thailand has kept its inflation target for next year unchanged at 1-3% for next year, a level it sees appropriate for the economy given the lingering pandemic conditions.
  • Headline inflation next year is expected to top 3%, its highest level in a decade and up from 0.8% to 1.2% this year, driven by cost-push factors including rising imported raw materials, a recovery in domestic demand, high oil prices and a labour shortage, the Trade Policy and Strategy Office predicts.
  • Medical services, beauty and e-commerce are expected to maintain their bright growth outlook in 2022, driven by the persistent pandemic and changing consumer behaviour based on a digital economy.
  • The Tourism Authority of Thailand (TAT) is planning a massive marketing campaign engaging 26 global and regional influencers to promote the country's reopening, including Thai-British Formula One driver Alex Albon among the candidates. It is seeking cabinet approval for a total stimulus marketing budget of 13.2 billion baht.
  • Thailand has set a target for rice exports of 7 million to 7.5 million tonnes next year, up from an estimated 6 million this year, helped by sufficient water supply and a weak baht, making Thai grains more competitive.
  • The government is hoping to accelerate the recovery of Thailand's aviation industry, with a goal of 200 million passengers per year by 2031, up from about 165 million before the pandemic, Transport Minister Saksayam Chidchob said on Monday.
  • The government is ready to relax rules to help small and medium-sized enterprises (SMEs) access loans from financial institutions more easily, says Finance Minister Arkhom Termpittayapaisith.
  • The Finance Ministry might tax share sales by individual investors in the SET next year to generate additional revenue, says Mr Arkhom. The tax has actually been on the books for around 30 years, but has never been enforced.
  • Thailand plans to unveil detailed rules for digital assets to minimise risks to the financial system and provide greater investor protection as more people are drawn to cryptocurrencies, according to the central bank.
  • Thailand's media spending in 2021 is expected to be nearly on par with last year at 74.5 billion baht, but could increase by 13% next year if there is no significant impact from the pandemic, says Media Intelligence Group.
  • The government plans to require carmakers to lower their electric vehicle prices and produce EVs domestically within three years for both domestic and export markets.
  • US auto firms remain keen to use Thailand as a regional production base, focusing more on EVs, after Ford Motor Co on Dec 8 announced an investment of US$900 million to upgrade factories in Thailand that build its Ranger pickups and Everest SUVs, its largest-ever outlay in the country.
  • SET-listed Energy Absolute Plc (EA) has expanded its EV business upstream to large-scale battery production for buses and cars.
  • The shopping centre operator MBK Plc intends to buy stakes in Thai street food brands as part of its efforts to reduce business risks and raise new income.
  • Ratch Group Plc, Thailand's largest private power generator by capacity, is preparing to take full ownership of Sahacogen (Chonburi) Plc, the power generation arm of Saha Group Plc, through a tender offer to acquire a 49% share at 3.3 billion baht as part of a move to expand its power business.

Coming up: New Zealand will release November trade figures on Monday. On Tuesday, Britain will release November retail sales, and Canada will release October retail sales and November new housing prices.

  • Britain will release third-quarter GDP and current account data on Wednesday. The US will announce third-quarter GDP and November existing home sales.
  • The US will release November core durable goods orders, core personal consumption and new home sales on Thursday. Canada will release October GDP.

Stocks to watch: Capital Nomura Securities recommends holding 60% of one's equity position in stocks that benefit from megatrends. It picks GULF for power plants, ADVANC and TRUE for communications, KCE, HANA and SAPPE for export-oriented firms, SCB and KBANK for banks, and JMT and TIDLOR for consumer finance.

  • UOB Kay Hian Securities recommends short-term investment in stocks expected to benefit from the interest-rate increase cycle such as banks and insurance companies, among them BBL, KBANK, SCB and TIPH. For consumer stocks, it recommends CPN, CRC, CPALL and MAKRO. The broker also recommends stocks of firms that will benefit from the prospect of more multinationals moving production bases to Thailand to mitigate geopolitical risk, including AMATA, WHA, ROJNA, CCET and SMT.

Technical view: Capital Nomura sees support at 1,585 points and resistance at 1,672. SCB Securities sees support at 1,622 and resistance at 1,658.

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