RECAP: Shares in Asia continued to decline yesterday against the backdrop of worries about the Chinese economy and property sector and higher global interest rates.
The SET Index moved in a range of 1,506.00 and 1,535.97 points this week before closing yesterday at 1,519.12, down 1% from the previous week, in daily turnover averaging 55.29 billion baht.
Retail investors were net buyers of 4.25 billion baht followed by brokers at 879.85 million. Foreign investors were net sellers of 3.92 billion baht followed by institutions at 1.21 billion.
NEWSMAKERS: Fitch Ratings says it may consider rethinking China's A+ sovereign credit rating as its debt-to-GDP ratio has increased. It will also review the medium-term GDP forecasts for developed economies including the US, the UK, Germany and Japan.
- Fitch Ratings has warned of another possible downgrade in US bank ratings to A+, including JP Morgan, the country's largest lender, and Bank of America.
- China released weaker than expected economic data, with retail sales growth slowing to just 2.5% year-on-year, pointing to shaky consumer confidence. Unemployment rose to 5.3% in July from 5.2% in June. The economy overall grew just 0.8% between the first and second quarters.
- China said it would stop publishing data on its rising youth unemployment rate. Joblessness among 16- to 24-year-olds hit a record 21.3% in June.
- The embattled Chinese property giant Evergrande Group filed for bankruptcy protection in the United States on Thursday. The developer's offshore debt restructuring involves $31.7 billion out of its $300 billion in liabilities.
- The Chinese developer Country Garden said there were "major uncertainties" over payments on its bonds, with fears swirling about a potentially catastrophic default by the company in September.
- The Japanese yen has slumped beyond 145 to the US dollar, a level that prompted authorities to intervene in the currency market last year. However, traders say movements this year have been less volatile and chances for intervention are lower.
- US factory output rose in July for the first time in three months, boosted by a surge in motor-vehicle output that's helping manufacturing to stabilise.
- UK inflation in July rose by 6.8%, down from 7.9% in June but still far too high in the view of the Bank of England, which may keep raising interest rates.
- Russia has ruled out capital controls but wants exporters to deposit more of their foreign revenues to help stabilise the rouble, which has fallen below 100 to the dollar for the first time since March 2022. The central bank earlier raised its interest rate from 8.5% to 12%.
- World oil consumption reached 103 million barrels a day for the first time in July, the International Energy Agency reported.
- Tesla has cut EV prices in China by 5%, and is offering free insurance, to spur sluggish sales.
- Indonesia's central bank has started a trial of cross-border QR code payments with its Singaporean counterpart.
- Thailand's economy is estimated to have grown 3.1% in the second quarter from a year ago, up from 2.7% in the first quarter, driven by increased tourist arrivals, according to a survey of economists polled by Reuters. Official figures will be announced on Monday.
- The El Nino weather phenomenon has led to reduced water levels in the Panama Canal, causing headaches for shipping companies, says the Ministry of Commerce. Shipping fees are rising as shippers have to reduce capacity per trip, so Thai export costs are expected to increase.
- The Department of Business Development reported foreign direct investment (FDI) of 59 billion baht in the first seven months of this year. The top five investors were Japan, the US, Singapore, China and Germany.
- China-based Changan Automobile is preparing to apply for Board of Investment privileges for an 8.8-billion-baht manufacturing base in Thailand to supply Asean and other markets.
- The Supreme Administrative Court has upheld a Central Administrative Court ruling that the Bangkok Metropolitan Administration must pay operational and maintenance fees of 11 billion baht for the Green Line to Bangkok Mass Transit System Plc (BTSC).
- Hopes are rising for the formation of a new coalition government led by the Pheu Thai Party, bolstered by the 36-member United Thai Nation Party and others, ahead of a scheduled vote for prime minister on Tuesday.
- The developer Sansiri Plc and its former CEO, Srettha Thavisin, who is expected to be nominated as the Pheu Thai prime ministerial candidate next week, have hit back at allegations by a whistleblower of irregularities in two land transactions.
- The industrial confidence index in July fell to a 10-month low of 92.3, from 94.1 in June, reflecting concerns about high household debt, weak purchasing power, higher interests rate and unclear politics, said the Federation of Thai Industries.
- Credit card issuers are lobbying the Bank of Thailand to raise the maximum annual interest rate beyond 16%, saying their margins have been squeezed by higher funding costs. They also want to delay a planned increase in the minimum debt payment to 8% next year from 5% of monthly balances now.
- The National Credit Bureau (NCB) reports that between 2020 and the first half of 2023, banks sold and transferred more than 287 billion baht in debt and are likely to sell more. Institutional NPLs in the second half of 2023 are expected to be higher than in the first half, it added.
- The NCB is concerned about bad car debt, which increased 18% year-on-year in the second quarter to 200 billion baht, reflecting the fragile state of many buyers' finances.
- Live chicken prices have fallen by 10 baht a kilogramme to around 35 baht since June 1 due to slow world demand and high inventories, says the Thai Broiler Processing Exporters Association.
- Thai AirAsia (TAA) reported a 42% year-on-year increase in average airfares of 42% for the first half, while Bangkok Airways registered a 36% uptick, though a weaker baht continued to affect airlines' profits.
COMING UP: The People's Bank of China will update prime lending rates on Monday. US pre-owned home sales for July will be released on Tuesday. Updated PMI figures for the US and the EU are due on Wednesday.
- Locally, the National Economic and Social Development Council will announce official Q2 GDP figures on Monday. The SET will stage "Thailand Focus: The New Horizon" from Wednesday through Friday.
STOCKS TO WATCH: InnovestX Securities recommends stocks of firms with profit growth momentum expected to continue into the third quarter, among them ADVANC, BBL, HMPRO and III. Stocks paying an interim dividend on H1 profits with a yield of 2% or more are SPALI, RJH and TU.
- Also recommended is speculation in oil stocks expected to show improvement on Q3 after a weak second quarter, such as BCP PTT, TOP and PTTEP.
- Asia Plus Securities has a positive view on stocks seen as benefiting from a Pheu Thai government, including TRUE, AMATA, CPALL, CPN, LH, CRC, BJC, AOT and ERW. Other interesting stocks are TPIPL, TASCO, SIRI, BCPG, KTB, SCCC and STEC.
TECHNICAL VIEW: AIRA Securities sees support at 1,505 points and resistance at 1,561. InnovestX sees support at 1,510 and resistance at 1,550.
