RECAP: Asian stocks rose strongly on Friday, extending a global equity rally, after better-than-expected Chinese economic data added to the optimism that tightening campaigns by major central banks were almost over.
Thai shares moved in a range of 1,532.48 and 1,551.01 points before closing on Friday 1,542.03, down 0.3% from the previous week, in daily turnover averaging 46.97 billion baht.
Retail investors were net buyers at 2.67 billion baht, followed by brokers at 1.12 billion. Foreign investors were net sellers of 3.64 billion baht, followed by institutions at 152.25 million.
NEWSMAKERS: The Chinese yuan climbed to its strongest in two weeks against the dollar after the encouraging economic activity data. Retail sales jumped 4.6% year-on-year in August, up from 2.5% in July. Industrial production climbed 4.5%, also a big increase from July and more than estimated.
- Chinese inflation grew 0.1% year-on-year in August after two months of declines, as deflation pressure decreased. The financial sector is also seeing the start of a recovery in terms of loans extended in the month.
- Moody's on Thursday cut the outlook for China's property sector to negative from stable, saying economic growth challenges would dampen sales. It expects sales to fall by about 5% over the next 6-12 months, with stimulus measures having only short-lived impact.
- US inflation rose 3.7% in August, following July's 3.2% rise, pushed up by rising fuel prices. Core inflation, however, slowed to 4.3% from 4.7%.
- US retail sales grew 0.6%, higher than expected, in August, while the producer price index topped forecasts with 1.6% annualised growth.
- The European Central Bank (ECB) on Thursday raised interest rates from 3.75% to 4%, the highest level since the launch of the euro, to tackle stubbornly high inflation. Economists say this is the likely peak in the current cycle.
- Oil supply cuts by Saudi Arabia and Russia will create a "significant supply shortfall" and threaten renewed price volatility, the International Energy Agency warns. Global oil markets face a deficit of 1.2 million barrels a day during the second half of 2023 following announcements by the Opec+ leaders that they will extend cutbacks totalling 1.3 million barrels per day to the end of the year.
- Apple unveiled its new iPhone lineup, replacing its Lightning charger ports with USB-C to accommodate universal chargers after a tussle with the EU. Thailand is a Tier 1 market for the company, meaning the iPhone 15 will be available for sale on Sept 22.
- Shares of Country Garden Holdings rallied after Reuters reported the distressed Chinese property developer had won approval from creditors to extend repayment on six yuan bonds by three years. The state-linked developer Sino-Ocean Group, meanwhile, suspended payment on all its offshore borrowings, citing tight liquidity.
- Shares of the K-Pop agency YG Entertainment tumbled almost 9% yesterday, the largest one-day drop since September 2022, after Thai Blackpink member Lisa Manoban reportedly rejected a contract renewal offer worth 50 billion won ($37.6 million).
- Pita Limjaroenrat has resigned as leader of the Move Forward Party (MFP) on Friday to make way for his successor to take up the post of opposition leader as his own MP status remains in doubt. The party will pick a new leader on Sept 23.
- The cabinet has approved spending of 3.48 trillion baht in fiscal 2024, with a budget deficit of 693 billion baht, 100 billion baht or 14% higher than the 593 billon projected in the fiscal 2024 budget approved earlier by the Prayut Chan-o-cha government.
- Prime Minister Srettha Thavisin used his government's first policy statement to announced a goal to bring GDP growth back to 5% per year. he also said the 10,000-baht digital wallet, expected to cost 560 billon baht, would go ahead without the need to touch the Vayupak Fund. The Ministry of Finance has said it will not take out new loans to maintain fiscal discipline.
- The Bank of Thailand said the 10-year bond yield is at 3%, reflecting concerns over increasing new supply, and is expected to reach 4-5%. The Thai Bond Market Association (ThaiBMA) says investors are watching for the government's borrowing plans, as increasing yields raise financial costs.
- The ThaiBMA is closely monitoring high-yield bonds that will mature in less than 3 months, suggesting investors to preparing a backup plan as they contain risk of default.
- The Consumer Confidence Index rose in August from July due to the formation of a government and expectations of more stable politics going forward, said the University of the Thai Chamber of Commerce.
- Central Food Wholesales, part of Central Retail Corporation (CRC), is preparing to allocate roughly 20 billion baht to expand its GO Wholesale store network over the next five years and compete with the Makro chain.
- The cabinet approved to cut the diesel tax and keep price below 30 baht per litre, starting on Sept 20. The cut in diesel tax, which is at 5 baht per litre, will not affect companies if there is an effort to cut marketing margin, it said.
- The cabinet approved a cut in electricity tariffs from 4.45 baht per kilowatt-hour (kWh) to 4.10 baht, from now until the end of 2023. It also approved a three-year loan moratorium for farmers and small businesses. Most of impact will be on government banks rather than commercial banks.
- The government will offer visa-free entry to tourists from China and Kazakhstan from Sept 25 to Feb 29. This will support tourism and will have a bigger impact than simply exempting visa fees.
- The visa-free scheme for Chinese travellers would not immediately increase the market to 700,000 arrivals from China per month because of concerns about safety and a slow resumption of flights, which are only half of the pre-pandemic levels of 2019, say industry experts.
- The Ministry of Transport says a three-month trial of a 20-baht flat fare will start around year-end on the Red Line (Bang Sue–Rangsit and Bang Sue–Taling Chan) and the Purple Line (Tao Poon-Khlong Bang Pai), with subsidy costs estimated at 136 million baht per year.
- The Ministry of Tourism and Sports said the number of foreign tourists between Jan 1 to Sept 10 had reached 18.53 million, generating revenue of 775 billion baht.
- The Federation of Thai Industries (FTI) reported a second month decline in the industrial confidence index in August to a one-year low as exports slowed in tandem with the world economy and partners' weak purchasing power.
- The Ministry of Finance plans to reform pico-finance loans to increase protection for consumers, especially regarding interest rates and fees.
- GAC from China plans to make Thailand its manufacturing base for right-hand drive vehicles, expecting to start producing in the middle of 2024.
COMING UP: The US will release the September housing index on Monday and the EU will report August inflation on Tuesday. On Wednesday the People's Bank of China will update its prime lending rate. The Fed will meet on Tuesday and Wednesday with a policy announcement due around 2am Thursday Thailand time. The Bank of Japan will meet on Sept 21-22.
STOCKS TO WATCH: InnovestX Securities sees positive sentiment arising from government stimulus policies, which will be good for selective buys with specific drivers.
- Its picks include eight stocks across four industries for which second-half profits are expected to grow: PTT, BCP, KCE, HANA, BDMS, BCH, AOT, and ERW. Stocks expected to benefit from policies deemed urgent with a focus on stimulating purchasing power and tourism include CPALL, CPAXT, HTC and OSP. Beneficiaries of the iPhone 15 launch will be COM7 and SYNEX.
- Asia Plus Securities recommends stocks that benefit from Chinese stimulus policy such as SCGP, PTTGC and IVL. Thai energy stocks are still cheap and will benefit from high oil prices. Top picks are PTTEP, TOP and SPRC. Beneficiaries of Thai government stimulus include CPALL, CRC, CPAXT, BEM, ADVANC, TRUE, AOT and ERW.
TECHNICAL VIEW: InnovestX Securities sees support at 1,530 points and resistance at 1,560. Krungthai XSpring Securities sees support at 1,529 and resistance at 1,555.