Investors cheer end of US debt drama

Investors cheer end of US debt drama

RECAP: Asian stocks advanced on Friday, buoyed by the passage of an agreement that averts a US debt default. Hopes that the US Federal Reserve will decide against lifting interest rates this month also lifted sentiment.

Thai shares moved in a range of 1,521.31 and 1,545.55 points last week before closing at 1,531.20 on Friday, up 0.024% from a week earlier, on average daily trading value of 49.18 billion baht.

Retail investors were net buyers of 6.17 billion baht, followed by institutional investors at 3.26 billion. Foreign investors were net sellers of 9.22 billion baht, followed by brokers at 209.35 million.

NEWSMAKERS: The US Senate passed legislation suspending the government's $31.4-trillion debt ceiling, ending weeks of political drama and averting what would have been a first-ever default.

Some Fed officials are said to support a pause in raising interest rates at their June 13-14 meeting. FedWatch Tool now sees a 70.4% probability the Fed will keep its key rate at 5.00% to 5.25%, with a 29.6% probability of another 25-basis-point increase.

Foreign investors' sales of Chinese shares gained some momentum in May, as flagging domestic demand and expectations for weak earnings led to steep falls on mainland and Hong Kong stock markets.

Chinese factory activity remains weak, with the purchasing managers' index falling to 48.8 in May from 49.2 in April. The figures underline the economy's shaky recovery from the pandemic.

Euro zone inflation eased more than expected in May, supporting the case for a less aggressive approach to interest rates by the European Central Bank. Inflation in the 20 nations sharing the euro eased to 6.1% in May from 7.0% in April.

Foreign investors continue to scoop up Japanese shares, with net buying of ¥381.6 billion ($2.75 billion) in the fourth week of May, as the Nikkei index continued to trade at 33-year highs.

Toyota Motor announced plans to invest $2.1 billion more in its new US battery plant in North Carolina, as the Japanese automaker deepens efforts to tap rising demand for electric vehicles.

Daikin plans ¥800 billion ($5.7 billion) in capital investments over the next three years, as the Japanese conglomerate seeks to cash in on demand for energy-efficient heating in Europe and India's growing air conditioner market.

Renewable energy capacity worldwide will exceed 4,500 gigawatts in 2024, roughly on a par with fossil fuels, the International Energy Agency said this week.

The Indonesian copper miner Amman Mineral Internasional aims to raise up to 12.94 trillion rupiah ($880 million) in an initial public offering scheduled for June 28 to July 3.

Indian gross domestic product grew 6.1% in the January-March period, up from 4.5% in the previous quarter, as the economy continues to recover from the effects of the pandemic.

Vietnam, the world's third-largest rice exporter, after India and Thailand, aims to cut its rice exports to 4 million tonnes a year by 2030, from 7.1 million last year, with a focus on higher-quality grades for export and on domestic food security.

The Bank of Thailand on Wednesday raised its key interest rate by 25 basis points to 2.0%, its sixth consecutive hike, signalling that it is still worried about inflation. The central bank expects the economy to grow by 3.6% this year and 3.8% in 2024, supported by healthy tourism and private consumption.

The Pheu Thai Party suspended its plans for a 10,000-baht digital wallet for every Thai aged 16 and over. Doing so would provide more scope for the social welfare policies of the coalition-leading Move Forward Party, said Pheu Thai secretary-general Paopoom Rojanasakul.

The cabinet on Tuesday approved an extension to employment contracts that allow more than 200,000 migrant workers to keep their jobs, easing concern over a labour shortage.

The Federation of Thai Industries has forecast 60,000 newly registered all-electric cars in 2023, with more than 10,000 from China. Registrations of battery-electric vehicles grew 320% in April.

The dollar value of exports in April fell 7.6%, the seventh month of contraction, leading to a contraction of 5.2% in the first four months, highlighting high stockpiles in trade partners. But the Ministry of Commerce says it is keeping its export growth target of 1-2% this year.

The Ministry of Finance said the 5-baht per litre cut in excise tax on diesel that is due to expire on July 21 will not be extended, leaving the next move up to the new government. The Ministry of Energy suggested the Oil Fund could pause its collection of levies on diesel for four months to help keep prices in check.

The Tourism Authority of Thailand (TAT) forecasts 30-35 million foreign tourists in 2024, hoping to create a market where spending per trip doubles to help meet its target of 3 trillion baht.

Tourist VAT refunds have skyrocketed since Thailand fully reopened in June last year, according to the Revenue Department. In 2022, the department refunded 1.2 billion baht to 423,000 tourists. This year in the first quarter alone, refunds reached 700 million baht.

The Stock Exchange of Thailand (SET) and Singapore Exchange (SGX) have launched trading in depositary receipts of three listed Thai companies on the SGX: Airports of Thailand (AOT), CP All (CPALL) and PTT Exploration and Production (PTTEP).

COMING UP: China and the EU will release PMI updates today while the US will also report PMI and factory orders. On Wednesday, China will release May trade figures and the US will report April trade data and oil stocks.

Locally, the Ministry of Commerce will announce May trade and economic data on Tuesday. The University of the Thai Chamber of Commerce will release the consumer confidence index, and the Federation of Thai Capital Market Organisations (Fetco) will report the Investor Confidence Index.

STOCKS TO WATCH: InnovestX Securities recommends three themes. The first comprises stocks of firms that could benefit slightly from the policies of the new government, including BBL, KTB, KBANK, HMPRO, GLOBAL, BCH, CHG, SPRC, STANLY, AH, ONEE, HTC and TNP.

The second group includes stocks with upgraded ratings or raised target prices: KKP, BJC and OSP. The third comprises high-risk or speculative plays: DELTA, PTTEP and BCP.

In the short term, InnovestX recommends avoiding power plants and PTT group stocks given the risk of new energy policies and pricing structures under a new government. Companies that could be hurt by a higher minimum wage include logistics (KEX), food (CPF, ZEN, GFPT, TU, AU and CENTEL), property (LPN, PSH, SIRI, QH and AP) and electronic components (HANA and KCE) firms.

Trinity Securities recommends banks that are likely to benefit from rising interest rates, namely BBL, KBANK and SCB. Also recommended are consumer finance stocks that would benefit from a higher minimum wage, resulting in more spending power and debt-servicing ability, such as SAWAD, MTC, and TIDLOR. Stocks in the consumer sector with good momentum include BJC, MAKRO, CRC, GLOBAL and DOHOME.

TECHNICAL VIEW: Trinity Securities sees support at 1,500 points and resistance at 1,570. Phillip Securities sees support at 1,490 and resistance at 1,580.

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