Set flirts with 1,600 as central banks stay busy

Set flirts with 1,600 as central banks stay busy

Recap: China's surprise interest rate cut, the first in more than two years, and speculation about further stimulus by the European Central Bank (ECB) propelled the run-up in Asian stock markets last week. The buying spree in tax-saving equity funds as the year-end approaches buoyed the Thai bourse which briefly surpassed 1,600 points.

The SET Index moved in a range of 1,584.54 and 1,602.28 points and closed at 1,593.91, up 0.9% gain from the previous week, with brisk daily turnover averaging 54.22 billion baht. Foreign investors were net buyers of 4.18 billion baht and brokers bought 4.11 billion more than they sold. Institutional investors were net sellers of 1.44 billion baht and retail investors sold 6.85 billion.

Big movers: The market saw two more IPOs last week. Vichitbhan Palmoil (VPO) rose 8.9% from its 2.70-baht IPO price on its opening day. Muangthai Leasing (MTLS) surged 116% on Wednesday from the IPO price at 5.50 baht.

Top gainer NBC added 54.5% to 5.10 baht. Top loser and volume leader IEC slid 28.6% to 0.05 baht. The top three by turnover, excluding MTLS, were PTT, down 1% to 383 baht; followed by TRUE, gaining 6.1% to 12.10 baht; and ITD, up 2% to 7.60 baht.

Newsmakers: Revised data showed the US economy grew at a much faster pace than initially thought in the third quarter, by 3.9% year-on-year compared with the 3.5% rate reported earlier.

♦The global economy will gradually improve over the next two years but Japan will grow less than previously expected while the euro zone struggles with stagnation and increased deflation risk, according to the OECD. It forecast global expansion of 3.3% this year, 3.7% next year and 3.9% in 2016.

♦The People's Bank of China cut its benchmark interest rates for the first time since July 2012. The one-year lending rate was reduced by 40 basis points to 5.6%, while the one-year deposit rate was lowered by 25 bps to 2.75%. Previously, the central bank had been relying on selective easing and liquidity injections.

♦Finance Minister Sommai Phasee said elections before mid-2016 were unfeasible. Deputy PM Prawit Wongsuwon echoed the view, saying "If everything goes out as planned and if the constitution is ready, we think elections will be held in 2016". Both also hinted it may be a year before martial law is lifted or relaxed.

♦The Finance Ministry has agreed in principle to extend tax incentives for investment in long-term equity funds (LTFs), which were scheduled to expire at the end of 2016, with a requirement of a longer investment period and potentially reduced tax privileges.

♦Finance Minister Sommai Phasee said the new economic stimulus measures will be announced on Dec 9.

♦The cabinet approved a draft memorandum of understanding with the Chinese government for the construction of double-track railway from Nong Khai to Map Ta Phut and Bangkok. The 400-billion-baht project is part of the 2.4-trillion-baht infrastructure budget for 2015-22.

♦CP Group chief Dhanin Chearavanont confirmed reports that he is interested in buying LH Bank and Tesco Lotus if they are put up for sale.

♦The Mass Rapid Transit Authority will tap local sources to borrow more than 200 billion baht next year to fund five electric railways.

♦Visitor arrivals to Thailand rose 6.1% in October, thanks largely to a 67% surge in arrivals from China after new visa-free travel was introduced.

♦The Board of Investment (BoI) approved 23 projects worth a combined 79.2 billion baht. They included second-phase eco-car production by four companies that will invest more than 34 billion baht.

♦The Fiscal Policy Office (FPO) forecast economic growth was likely to be more than 4% this quarter, taking full-year growth to 1.4%.

♦BTS failed to win a 30-year concession to operate Beijing Subway Line 16 after being underbid by Beijing MTR. However, the company said the international experience was valuable and it would seek more work abroad.

♦TrueVisions plans to spend 10.5 billion baht on advertising over three years, from just 450 million this year, to help expand its subscriber base in the mid- to-mass market. It expects to double revenue to 20 billion baht within two years.

♦Kasikornbank targets 8-9% growth in lending next year, with SME loans being the major driver.

♦The warehouse firm Ticon Industrial Connection targets asset growth of 20 billion baht over the next 3-5 years, capitalising on potential demand within the AEC, by issuing a real estate investment trust (REIT) worth 4.5 billion baht to expand investment next year.

♦Major Cineplex Group Plc projects revenue will reach 15 billion baht in 2020 when it expects to operate 1,000 screens in Thailand and abroad. It has a 5.2-billion-baht investment budget to add 500 new screens.

♦Workpoint Entertainment expects its will increase by 50% to 15 billion baht in two years thanks to the success of digital TV and a wider viewer base.

♦The green tea maker Ichitan Group plans to build a plant worth 1 billion baht in Indonesia next year. It aims for 25% more revenue next year.

Coming up this week: Thailand will release November inflation data today. Due the same day are Chinese, European and US manufacturing indices for November.

♦China's non-manufacturing PMI for November, US private sector employment and euro-zone third-quarter GDP figures are due on Wednesday. The ECB will meet on Thursday.

♦Thailand will release its consumer confidence index on Thursday. Markets will close on Friday for His Majesty the King's birthday.

Stocks to watch: Bualuang Securities has a buy recommendation on TTA after it recovered to a profit of 1 billion baht for its 2014 fiscal year ended Sept 30. Also recommended are WORK on expectations of earnings growth over the next two years, and BIGC as foreign investors have a more positive view following a recent international roadshow. The broker also recommends solar power producers TSE, IFEC and SOLAR after the government updated plans for propose power purchase agreements (PPA).

Tisco Securities suggests accumulating stocks that are targeted for LTF and RMF investments. They are ADVANC, BGH, INTUCH, KBANK, LH, SCB and TRUE. Stocks expected to be added to the SET50 are CK and SPALI, and ANAN and DEMCO are expected to join the SET100.

Asia Plus Securities has buy recommendations for STPI, SAMTEL and PTTGC.

Technical view: Bualuang Securities sees support at 1,575 with resistance at 1,615. Asia Plus Securities sees support at 1,590 and resistance at 1,617.

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