Hawkish turn by Fed spooks equity investors

Recap: Global shares faced selloffs sparked by mounting fear of inflation as the US Federal Reserve telegraphed a gradual end to ultra-loose monetary policy. The MSCI World Equity Index dipped 0.13% to 713.97 points on Friday after hitting a record high of 722.32 on Tuesday. European banks and energy slid while Tokyo stocks fell as the yen appreciated against the dollar.

The SET index moved in a range of 1,604.44 and 1,642.8 points this week before closing yesterday at 1,612.98, down 1.44% from the previous week, in daily turnover averaging 92.77 billion baht.

Retail investors were net buyers of 4.82 billion baht, brokerage firms bought 1.89 billion baht and institutional investors purchased 684.29 million. Foreign investors were net sellers of 7.39 billion baht worth of shares.

Newsmakers: The Fed has begun exploring how to gradually scale back its massive bond-buying stimulus as the US economy roars back to life. It also signalled that interest rates could start to rise in 2023, a year earlier than expected.

• The Fed is closely watching the biggest surge in inflation in 13 years, with May consumer prices up 5% from a year ago. It believes, however, that such gains will be short-lived given last year's low base.
• The US House of Representatives has passed legislation aimed at reining in giant tech companies, including a bill that seeks to make Amazon.com and other large corporations effectively split in two or shed their private-label products.
• The US and the EU have agreed to extend a tariff truce for five years, parking a dispute over subsidies given to aircraft makers Airbus and Boeing that let to the allies imposing duties on $11.5 billion worth of each other's exports.
• General Motors is hitting the accelerator on its drive towards electric autos, significantly boosting its near-term investments as it unveils new models and builds production capacity.
• Toyota Motor Corp's line-up over the next 30 years will contain many options beyond just electric vehicles, executives told the annual shareholders' meeting this week.
• Indonesia aims to sell only electric motorcycles by 2040 and electric cars by 2050 to replace vehicles powered by combustion engines.
• Novavax Inc on Monday reported late-stage data from its US-based clinical trial showing its vaccine is more than 90% effective against Covid-19 across a variety of variants of the virus.
• The global securities index publisher MSCI is looking at launching indexes for cryptocurrency assets, in what would be another step towards mainstream acceptance for digital currencies and the companies trading in them.
• Gold suffered its biggest one-day drop in five months as the Fed signalled it was ready to speed up the pace of policy tightening. UBS analysts said gold, now trading around $1,780 an ounce, could fall as low as $1,600 over the next six to 12 months.
• Carro, a Southeast Asian online auto marketplace, has raised $360 million in a new funding round led by SoftBank Vision Fund 2, becoming the region's latest unicorn, valued "well above" $1 billion.
• Prime Minister Prayut Chan-o-cha says the government plans to fully reopen the country by Oct 14, despite the risk of a further rise in Covid infections.
• Gen Prayut will visit Phuket on Friday to inspect preparations for the island's reopening to international visitors on July 1. The much-touted "sandbox" programme was reviewed again yesterday by the Covid task force and requires a final cabinet greenlight on Tuesday.
• About 1.6 million more doses of AstraZeneca vaccine are being delivered this week as the Public Health Ministry promises more effective distribution following a week of confusion and cancellations.
• Authorities aim to make vaccinations available at 27 sites, including major industrial estates, to workers from some 24,000 companies, in a bid to speed up the rate of vaccination.
• SET-listed Thonburi Healthcare Group Plc (THG) will import 5 million doses of Moderna vaccines through the Government Pharmaceutical Organisation.
• The government asked the central bank to review credit card and personal loan interest rates to try to tackle high household debt, the prime minister said Tuesday, sending bank shares falling.
• Chansin Treenuchagron has resigned as acting president of Thai Airways International. He will remain as an administrator of the airline's business rehabilitation plan, which the Central Bankruptcy Court approved this week. THAI is now in talks for loans of up to 25 billion baht to continue operating while it restructures 170 billion baht in debt.
• The Securities and Exchange Commission has banned digital asset exchanges from trading gimmick tokens based on social media trends or linked to celebrities, along with NFTs and other types of digital assets with "no clear objectives or substance".
• The number of electric vehicles in Thailand is expected to reach 1 million in 2028 -- an increase of 24% per year -- with Japanese-made plug-in hybrid electric vehicles to drive the next generation of cars, says the research house Krungthai Compass, an affiliate of Krunghtai Bank.
• Property developers are optimistic for the second half of 2021 as the vaccination rollout increases consumer confidence, according to Property Perfect Plc. PF has maintained its revenue target of 18.2 billion baht for 2021.
• Some big names, including a former air force chief, have applied for seats on the National Broadcasting and Telecommunications Commission (NBTC) board, in the latest round of applications in a process that has dragged on for years.
• Fifty-seven money changers closed over the past year, while the volume of money exchanged plunged by over 600%, amid the ban on international travel.
• Car exports to Vietnam could face non-tariff barriers after the biggest importer in Asean of pickups and passenger cars from Thailand prepares to enforce the new Euro 5 emission standard from Jan 1.
• Thailand will ask Vietnam to review its punitive measures on Thai sugar and open a new investigation next year. Officials maintain the damage is not as great as claimed by Hanoi, which this week imposed an anti-dumping levy of 47.64% on some Thai sugar products for five years.
• Coming up: Australia will release May retail sales on Monday, and China's central bank will update the prime lending rate. The US will release May existing home sales on Tuesday.
• The Bank of Thailand will announce its policy decision on Wednesday, and the Commerce Ministry will release May trade figures. Germany and the euro zone will release June manufacturing data, and the US will release May new home sales.
• Germany will release the June business outlook on Thursday, and the US will release revised first-quarter GDP data. Japan will release June inflation on Friday and the US will release May personal consumption data.

Stocks to watch: SCB Securities recommends three investment themes based on large-cap, mid- to small-cap stocks, and firms poised to gain from economic reopening. Its picks are PTT, KBANK, SPALI, BEM, CPN, CRC, ZEN, PM, TPAC, WICE, SFT and CPW. It also likes EA and its plan to produce around 3,500 electric vehicles per year; and GPSC, which is investing in a 1,700 MW solar farm in India and a wind energy plant of 200-300 MW in Taiwan.

UOB Kay Hian suggests high-dividend stocks and REITs, among them ADVANC, BTSGIF, CPNREIT, AIMIRT, FTREIT, EASTW, WHAUP, TTW and TIP. It also recommends short-term speculation on digital TV stocks including BEC, WORK, MONO and JKN, and logistics and shipping plays such as SONIC, NCL, TTA, PSL and RCL.

Technical view: Maybank Kim Eng Securities sees support at 1,605 points and resistance at 1,642. SCB Securities sees support at 1,600 and resistance at 1,640.