Japan's negative-rate move gives equities a big lift

Japan's negative-rate move gives equities a big lift

Rice export value and volume are both expected to fall this year.
Rice export value and volume are both expected to fall this year.

Recap: Global stock markets advanced last week as the cooling economy in China supported views that the US Federal Reserve will have to slow its pace of interest-rate increases this year. The Bank of Japan's surprise move to negative interest rates to beat stubborn deflation lifted markets sharply higher on Friday. The Thai stock market also tracked the global euphoria.

The SET Index moved in a range of 1,259.35 and 1,301.01 points before closing at 1,300.98, gaining 2.6% from the previous week, in turnover averaging 43 billion baht a day. Brokers were net sellers of 1.67 billion baht and retail investors cashed out 6.2 billion. Foreign investors were net buyers of 2.57 billion baht and institutional investors bought 5.3 billion.

Big movers: EFORL was the top loser, sliding 21.7% to 0.54 baht. Top gainer POLAR added 37.5% to 0.11 baht. Leading in volume was JAS, steady at 0.03 baht. Leading in turnover were PTT, adding 8.3% to 236 baht; JAS, unchanged at 3.12 baht; and ADVANC, rising 6.3% to 169 baht.

Newsmakers: Preliminary fourth-quarter GDP figures on Friday showed US growth slowing to just 0.7%, adding weight to earlier Federal Reserve comments that slowing global growth was becoming a bigger concern, despite stronger employment and housing sales. That suggested the Fed will not attempt another rate increase in March as most economists had expected earlier.

With tumbling oil prices hampering its efforts to achieve its 2% inflation target, the Bank of Japan said an interest rate of minus 0.1% would be applied to some accounts of financial institutions at the central bank, starting from Feb 16.

Japan's trade deficit narrowed sharply in 2015 as tumbling oil prices took pressure off its soaring post-Fukushima energy import bill. The country recorded its fifth-straight annual deficit, but it was down by 78% from 2014 to 2.83 trillion yen (US$23.8 billion).

IMF managing director Christine Lagarde says she does not see China having a "hard landing". While many people do not trust official Chinese data, Lagarde said the markets should believe the growth figures Beijing announces. However, she said that the market needs more clarity on China's exchange rate policy.

Strong domestic demand and government spending cushioned the impact of weaker exports as the Philippines recorded impressive 6.3% growth in the fourth quarter of last year, bringing full-year growth to 5.8%

Thailand's Finance Ministry cut its 2016 growth forecast from 3.8% to 3.7%, which still exceeds the central bank's forecast of 3.5%. The ministry sees growth being supported mainly by government investments and stimulus measures. It forecast export growth of only 1% due to sluggish global demand.

A study by the Panyapiwat Institute of Technology, commissioned by the Commerce Ministry, has found the benefits from joining the Trans-Pacific Partnership (TPP) would outweigh the losses. Benefits would include improved product manufacturing and service standards thanks to tariff reductions, and lower barriers to investment and services trade. The study estimates TPP membership would boost GDP by 0.77%, with growth as much as 1.06% if Indonesia and Philippines participate.

The Thai Rice Exporters Association forecasts oil-price and foreign-exchange risks will contribute to a 6.7% drop in rice export value to US$4.3 billion while volume will decline 8.1% to 9 million tonnes. However, it also believes Thai rice prices have bottomed out and will pick up.

The Commerce Ministry has set an export growth target of 5% to $225 billion this year, an average of $18.8 billion a month, on the back of economic recovery in key trading partners. Exports fell for a third straight year in 2015, declining 5.8%, the biggest drop since the US debt crisis sent Thai exports tumbling 14.3% in 2009.

The Tourism Authority of Thailand expects around a million foreign tourists during Chinese New Year, up 19% from the previous year, generating revenue of 29 billion baht, a 32% increase from last year.

BAY has clinched a deal to fully acquire Hattha Kaksekar Ltd (HKL), Cambodia's fourth-largest microfinance lender, to capitalise on that country's solid growth prospects.

Siam Cement Group (SCG) posted strong fourth-quarter and full-year earnings thanks largely to its chemical business. SCG posted a fourth-quarter net profit of 11.4 billion baht, up 29% year-on-year, despite weak performances by its cement and building materials units. Full-year net profit was 45.4 billion baht, up 35% from 2014.

Prime Minister Prayut Chan-o-cha said a general election remained on track by July 2017 in line with the junta's 20-month roadmap to democracy, even if the draft constitution is rejected in a referendum. However, charter drafters said on Friday that polls could be pushed back to November 2017 as drafting organic laws could take longer than expected.

The cabinet approved a budget of 52.82 billion baht to facilitate Thailand joining the China-led Asian Infrastructure Investment Bank, giving the country a 1.43% share of the bank. Payments will start in five installments, each of 2.1 billion baht, with the first due at the end of 2019.

The Home Builder Association (HBA) expects demand for self-built homes to increase significantly this year. It noted strong interest in 2015 but said consumers delayed decisions because they lacked confidence in the overall economy. It expects sales of self-built homes to grow by 15% to 12 billion baht this year.

The Finance Ministry is seeking cabinet approval to waive import tariffs on 1,100 items across 56 categories. While tax revenue is expected to shrink by 3 billion baht, local manufacturers are expected to benefit from cheaper materials, especially for intermediate goods used in final production of high-value goods.

Airports of Thailand (AOT) said bidding for the first three construction projects under the second-phase expansion of Suvarnabhumi airport was expected to start in March with work expected to begin in June. The total expansion would include seven projects worth a combined 51 billion baht, and the first stage will comprise three projects worth 18 billion baht.

Coming up this week: Earnings season for Thai listed companies continues with highlights including the top mobile players DTAC on Wednesday and ADVANC on Thursday.

Thailand's inflation data for January will be released today. Due the same day are new Chinese and euro zone manufacturing PMI figures.

The Indian and Australian central banks hold policy meetings tomorrow.

The Bank of Thailand's Monetary Policy Committee will meet on Wednesday. Due the same day are Chinese services PMI figures, US employment and euro zone composite PMI.

The Thailand consumer confidence index and US durable goods orders will be released on Thursday.

Indonesian GDP and US payrolls and unemployment data will be released on Friday.

Stocks to watch: Bualuang Securities recommends alternative energy and export-oriented stocks, companies benefiting from a weaker baht, high dividend plays and high growth stocks. Its picks are PTT, PTTEP, PTTGC, KTB, SCC and ASEFA.

Tisco Securities recommends firms expected to report good Q4 results. They include AP, BJCHI, CPALL, CPN, MTLS, NYT, SPA, TASCO and THCOM. High-dividend stocks are ADVANC, AP, ASP, BJCHI, BTSGIF, DTAC, INTUCH, KGI, KKP, MAJOR, QH, SIRI, TCAP and TVO. The brokerage also recommends stocks that will benefit from infrastructure projects such as CK, SEAFCO, TASCO and TPIPL.

Technical view: Finansia Syrus sees support at 1,265 points with resistance at 1,310. Tisco Securities pegs support at 1,255 and resistance at 1,315.

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