Global markets advance, foreigners power SET

RECAP: Global markets advanced as investors believe inflation might be starting to ease in many countries, but they were awaiting further signals yesterday from US Federal Reserve chairman Jerome Powell about how aggressively he will raise interest rates.

The SET continues to benefit from buying by foreign investors, who are confident that the Thai economy will recover in the second half of the year. The SET Index moved in a range of 1,609.81 and 1,650.71 points this week before closing yesterday at 1,644.78, up 1.2% from the previous week, in daily turnover averaging 72.25 billion baht.

Foreign investors were net buyers of 10.02 billion baht and brokers bought 820.89 million. Retail investors were net sellers of 6.26 billion and local institutional investors sold 4.58 billion baht worth of shares.

NEWSMAKERS: Politics dominated local headlines this week but the change in prime minister resulting from a Constitutional Court order did not affect market sentiment. Foreigners continue to buy Thai stocks with a combined total of 169 billion baht for the year through yesterday.

• With Gen Prayut Chan-o-cha suspended from prime ministerial duties until the charter court rules on whether his eight-year term is over, Deputy Prime Minister Prawit Wongsuwon has become the acting prime minister. Gen Prayut remains defence minister and no other cabinet changes are expected.
• The Ministry of Finance now predicts Thai GDP will grow 3.5% for the year. Exports in July grew 4.5%, the Ministry of Commerce reported.
• SCB X Group, the parent of Siam Commercial Bank, has scrapped its planned 17.8-billion-baht investment in Bitkub Online, the country’s biggest digital asset exchange, amid uncertainty over Bitkub’s resolution of regulatory issues with the Securities and Exchange Commission.
• International funds flowed into regional equity markets on Thursday with a value of US$184 million, including $98 million to Taiwan, after several days of selling.
• Analysts now see a 60% likelihood that the Fed will raise its benchmark interest rate by 75 basis points at its Sept 20-21 meeting, up from 50% in an earlier survey. If the hike is smaller, more funds will flow back into risk assets.
• China has stepped up its economic stimulus with a further 1 trillion yuan ($146 billion) largely focused on infrastructure spending, but analysts say it’s still not enough to counter the damage from repeated Covid lockdowns and a property market slump.
• Indonesia may raise subsidised fuel prices by 30-40% to manage pressure from a ballooning subsidy budget, lawmakers from the ruling coalition told Reuters yesterday.
• Shares of Chinese companies listed in the US surged by the most in more than two months on Thursday as talks between the countries to avoid delisting of Chinese firms over audit compliance gathered momentum.
• Oil prices were on track for a weekly gain after data showed the US shipped a record amount of crude and refined products overseas.
• British households will pay almost triple the price to heat their homes this winter compared with a year ago, with the worst cost-of-living crisis in decades a huge challenge for the country’s next prime minister.
• The crypto world is bracing for a major shift next month when Ethereum adopts a new validation system for its blockchain that will eliminate mining, which has been criticised for its use of massive amounts of energy.
• Afghanistan’s central bank has banned cryptocurrencies and the Taliban is arresting dealers. The crackdown comes after some Afghans turned to cryptocurrencies to preserve their wealth and keep it out of the Taliban’s reach.
• Thai household debt has reached a 16-year high of 501,711 baht on average, up 3.7% from 2020 amid slow economic growth after the protracted pandemic, a survey by the University of the Thai Chamber of Commerce (UTCC) showed.
• TPI Polene Power Plc, the country’s largest waste-to-energy power producer, is allocating almost 10 billion baht between now and 2023 to develop two new facilities and use more refuse-derived fuel to replace coal. Of the total, 4.8 billion baht will be spent to phase out coal usage and the remainder to support new waste-to-energy projects.
• The Bank of Thailand plans to maintain a gradual approach to normalising monetary policy as it aims to control inflation amid an uneven economic recovery. The central bank’s Monetary Policy Committee has two more meetings this year, in September and November.
• Samart Digital Plc is expanding its online astrology offerings to tap high demand for fortune telling and belief-related commerce. The business operated by subsidiary is preparing to expand into Laos and Cambodia in its third year of operation.
• The cabinet has approved spending worth 2.9 billion baht to subsidise electric vehicle (EV) purchases to help make Thailand the region’s EV production base. The subsidies for purchases of passenger cars, pickup trucks and motorcycles range from 18,000 to 150,000 baht per unit.
• Gunkul Engineering, a renewable energy developer, plans an initial public offering of subsidiary Gunkul Power Development in the fourth quarter, with share trading to start in the first quarter of 2023. Gunkul aims to lift its generating capacity to 1,000 megawatts over the next five years, up from the current 655MW.
• After reporting a loss in the first half, the contractor Christiani & Nielsen Thai says it expects to return to profitability in the second half as oil and steel prices have dropped.
• PTT Oil Business and Retail (OR) has acquired a 25% share in Dusit Foods, a subsidiary of the hotel operator Dusit Thani Plc, to further develop lifestyle-related businesses.
• PTT Plc is preparing to build a factory to process plant-based foods with an investment of 200-500 million baht for the first phase at Rojana Industrial Estate in Ayutthaya. Initial production capacity will be 3,000 tonnes, rising to 25,000 within seven years.
• Charoen Pokphand Foods (CPF) has partnered with Bangkok Bank to launch the CPF x BBL liquidity scheme to help suppliers access working capital. The food and agribusiness group buys raw materials and goods from more than 10,000 suppliers.
• The entertainment and media group RS Plc is preparing to float 562 million common shares of Chase Asia Plc, its lending and debt collection business, on the SET through an initial public offering in the fourth quarter, to raise funds for future growth.

COMING UP: Germany will release updated inflation data on Tuesday, followed by Chinese manufacturing PMI, Japanese consumer confidence and euro zone inflation on Wednesday. China will release its Caixin manufacturing PMI on Thursday, follow by euro zone unemployment and us manufacturing PMI.

• Locally, the Bank of Thailand will release August economic figures on Wednesday. On the same day, Morgan Stanley Capital International will add Kasikornbank shares to its influential MSCI Global Standard index.

Stocks to Watch: Asia Wealth Securities (AWS) suggests a portfolio strategy focussed on food and restaurants, retail, energy and hospitals. For defensive stocks, it recommends BDMS, BCH, BH and ADVANC.

• For stocks benefiting from reopening, AWS suggests AOT, BAFS, BEM, AWC, ERW, MINT, SHR, PTG and SUSCO. In consumer goods and retail, it recommends MBK, MAKRO, CPALL, CPN and CRC. Food and restaurant picks are M, AU and ZEN, while EA, BGRIM, GPSC, GULF and EGCO are energy picks.
• In the commodity sector, AWS recommends PTTEP, BANPU, PTT, TOP, SPRC and BCP. Stocks expected to see continued profit growth in the second half are ADVANC, BH, BBL, BGRIM, BAM, BEM, CENNTEL, GPSC, GULF, MAKRO, CRC, OSP, SIRI and PTTGC.
• Asia Plus Securities recommends stocks that have strong potential for net profit to recover in the second half including CK, CENTE and M, together with stocks that will benefit from higher interest rates such as SCB, KBANK and KTB.

TECHNICAL VIEW: Maybank Securities sees support 1,613 points and resistance at 1,675. Thanachart Securities sees support at 1,630 and resistance at 1,658.