China and Japan data, fed worries depress stocks
Recap: Global stock markets sagged last week on concerns about the economies of China and Japan after their disappointing economic data. Investors also unloaded equities ahead of the US Federal Reserve's much-awaited meeting this week, even though expectations of an interest-rate rate increase appear to have receded for now.
The Thai stock market, however, was barely scratched by external factors, thanks to investor optimism about the government's new economic stimulus plan. Thai shares at one point broke through the 1,400-point barrier on Friday.
The SET Index traded in a range of 1,360.08 and 1,403.30 points before closing on Friday at 1,381.72, up 0.8% from the previous week, in moderate trade averaging 37.43 billion baht a day.
Foreign investors were net sellers of 4.21 billion baht and retail investors sold 1.65 billion more than they bought. Institutional investors were net buyers of 5.31 billion baht and brokers bought 556.4 million.
Big movers: RS was last week's top loser, tumbling 39.6% to 6.56 baht. Top gainer AJD rose 18.1% to 1.76 baht. AJD also led in volume, and was third in turnover. Leading in turnover were JAS, adding 7.1% to 6 baht; and PTT, down 3.5% to 251 baht.
Newsmakers: China's imports shrank 13.8% year-on-year in August, far more than expected, adding to concerns about the world's second-largest economy. The 10th straight month of declines, following an 8.1% drop in July, reflected both lower world commodity prices and persistently sluggish demand at home.
China's producer price index (PPI) fell 5.9% in August from a year earlier, its 42nd consecutive month of decline and the biggest drop since late 2009.
Japan's economy contracted by 0.3% in the second quarter, slightly less than an initial estimate of a 0.4% contraction.
Standard & Poor's cut Brazil's sovereign credit rating to junk on Wednesday, citing the struggle by President Dilma Rousseff's government to master growing debt and political turmoil. The country's long-term foreign and local currency ratings are now BB+ and BBB- respectively.
The Bank of Korea kept its key interest rate unchanged at 1.5% for a third month as it gauges the state of the economy and waits to see the impact of a possible policy shift by the Fed.
Citigroup chief economist Willem Buiter is forecasting a 55% chance of a global recession of moderate depth and length in the next two years. However, it will not be a made-in-USA affair but will stem from sliding demand from emerging markets, especially China.
Indonesia has announced a stimulus package aimed at luring investment, boosting consumer spending, and lifting the rupiah off 17-year lows. The government is streamlining regulations, simplifying the permission process for "strategic projects", and easing rules for foreigners opening bank accounts in foreign currency. It will provide more rice for the poor and look for cheaper foreign beef to tame inflation.
The Asian Development Bank (ADB) will revise down its GDP growth forecast for Thailand to below 2.9% following slower-than-expected performance in the first half. However, the new growth forecast, to be announced on Sept 22, will be higher than 2.5%.
The Thai cabinet approved new stimulus measures aimed at helping hard-hit SMEs. The measures include 100 billion baht in loans at 4% interest, and a corporate income tax rate of 10% for SME net profits exceeding 300,000 baht for two years. As well, SME startups will receive a five-year corporate tax exemption, while three state banks will contribute 6 billion baht in venture capital support.
Prominent legal expert Meechai Ruchupan is said to have been approached by Deputy Prime Minister Wissanu Krea-ngam to lead a new constitution-drafting body that is expected to be formed by next week. The new body will have 21 members and be given six months to come up with a document better than the one rejected by the National Reform Commission earlier this month.
The newly appointed president and chief executive of PTT Plc, Tevin Vongvanich, plans to review the company's capital expenditure plan for the next five years, indicating that the figure of 300 billion baht, reduced from 326 billion earlier, may be revised again.
The 4G licence auctions in November will help revive the economy, with at least 500 billion baht in fresh capital being injected into the system over the next two years, say telecom industry analysts. Of the total, 50 billion baht will come from the auctions, 130 billion from network infrastructure construction and 320 billion from direct investment opportunities, including smartphones and e-commerce.
Thai Union Frozen Products has entered the Middle East market through a joint venture with Saudi Arabia's Savola Group. The new venture, based in Dubai, will distribute and market TUF products across the Middle East.
Former Bank of Thailand governor Chaiyawat Wibulswasdi is tipped to replace Sathit Limpongpan as chairman of the Stock Exchange of Thailand, two market sources say. Naris Chaiyasoot, deputy permanent secretary for the Finance Ministry, is expected to chair the Securities and Exchange Commission (SEC).
Thai Airways International remains confident it can return to profit next year despite not being able to cut costs as much as expected. THAI posted a first-half net loss of 8.21 billion baht, an improvement over the 11-billion-baht loss in the same period last year.
Coming up this week: Euro zone industrial production figures for July are due on Monday.
The Bank of Japan will meet on Tuesday amid speculation that some tweaks to stimulus policy are possible, although most observers believe further easing will not take place until the Oct 30 meeting. Due the same day are US retail sales in August and the ZEW euro zone business sentiment survey.
The Bank of Thailand's Monetary Policy Committee (MPC) will meet on Wednesday but no change in the benchmark interest rate is expected. Due the same day are US and euro zone inflation figures for August.
The US Federal Open Market Committee (FOMC) will meet tomorrow and Thursday with a decision to be announced around 2am Friday Thailand time. US housing starts and building permits for August will be released on Thursday.
Stocks to watch: Finansia Syrus Securities is overweight in electronics, with SVI its top pick on expectations of 25% net profit next year, the highest among industry peers.
Thanachart Securities recommends ICT stocks as they will gain from the 900 MHz auction on Dec 15. Top picks are ADVANC and INTUCH, which are expected to win licences. The broker also recommends stocks that will benefit from government economic stimulus policy including CK, STEC, SEAFCO, SCC, KTB, CPALL, KTC and TM.
Technical view: Tisco Securities tips support at 1,360 with resistance at 1,420 points. Thanachart Securities sees support at 1,360 and resistance at 1,400 points.