Asian shares fall as Fed talks tough on rates

RECAP: Shares in Asia fell yesterday after the head of the US Federal Reserve warned interest rates may have to climb further, stunting a rally in stocks and bonds and sending investors back to the dollar.

Thai shares moved in a range of 1,387.41 and 1,431.51 points this week before closing yesterday at 1,389.57, down 2.1% from the previous week, in daily turnover averaging 46.76 billion baht.

Retail investors were net buyers of 5.29 billion baht, followed by institutional investors at 873.29 million and brokers at 796.72 million. Foreign investors were net sellers of 6.96 billion baht.

NEWSMAKERS: Federal Reserve chairman Jerome Powell said on Thursday that the central bank is keeping its options for more interest rate hikes on the table although monetary policy is in "restrictive territory" and putting downward pressure on inflation. Markets now do not expect to see US rates falling until July at the earliest.

• The International Monetary Fund upgraded its 2023 GDP growth forecast for China to 5.4% from 5%, citing a "strong" post-Covid-19 recovery, but said growth could slow to 4.6% in 2024 because of continued weakness in the property sector and subdued external demand.
• China's imports grew unexpectedly in October for the first time in 11 months while exports contracted at a quicker pace. Exports shrank 6.4% from a year earlier, faster than a 6.2% decline in September.
• The US trade deficit expanded in September to $61.5 billion, up from $58.7 billion in August. Imports picked up 2.7% to $322.7 billion, while exports grew 2.2% to $261.1 billion.
• The US Energy Information Administration (EIA) has lowered its forecast for the Brent crude price next year to $93.24 a barrel, down 1.8% from Oct. It also forecasts US gasoline consumption will fall 1% to a 20-year low.
• The Reserve Bank of Australia raised its benchmark interest rate by 25 basis points to a 12-year high of 4.35%, after keeping the rate steady for four months. It did not signal a further increase to curb inflation.
• Grab Holdings Ltd posted its first-ever profit on an adjusted basis, a milestone for the decade-old Southeast Asian super-app. Adjusted earnings before interest, taxes, depreciation and amortisation reached $29 million in the quarter to Sept 30, well above analysts' consensus forecast of $9.5 million.
• Tesla is preparing to produce a car priced at €25,000 (955,000 baht), which would be the cheapest EV it has ever produced, compared to the current starting price of the Model 3 at $38,990.
• The Japanese investment giant SoftBank Group reported a net loss of $6.2 billion in the three months to September, as its bets on startups continue to struggle, compared with a profit of ¥3 trillion ($19.8 billion) a year ago, when the company benefited from sales of shares in Alibaba.
• WeWork, the company that set out to revolutionise the office -- and attracted billions of investment dollars from SoftBank -- filed for bankruptcy protection in the United States after years of struggling to find its footing.
• Nintendo has raised its annual profit forecast to ¥500 billion ($3.3 billion), from ¥450 billion previously. The Japanese entertainment company reported an operating profit of ¥94.5 billion and revenue of ¥334.9 billion in the third quarter, both beating forecasts, partly helped by the yen's weakness.
• SMIC, China's largest chipmaker, has increased its annual capital expenditure forecast to $7.5 billion amid US-China tensions. It shrugged off an 80% drop in net third-quarter profit, saying it expected Chinese semiconductor demand to stabilise soon.
• South Korea will prohibit stock short-selling until June 2024 to allow regulators to "actively" improve rules and systems. The Financial Services Commission said trading with borrowed shares will be banned for companies in the Kospi 200 and Kosdaq 150 until the end of June.
• The Chinese automaker Geely has teamed up with Proton in Malaysia to stage a comeback in the Southeast Asian electric vehicle market, fuelled by a $10-billion investment in Malaysia.
• Prime Minister Srettha Thavisin confirmed yesterday that the 10,000-baht digital wallet handout would begin in May and last for six months. An estimated 50 million Thais over age 16 with a monthly salary of less than 70,000 baht and deposits of less than 500,000 baht will be eligible.
• Mr Srettha said the handout would be funded by a loan of 600 billion baht -- 500 billion for the digital wallet and another 100 billion for "capacity-building" projects.
• Inflation in October contracted by 0.31% year-on-year, the first decline in 25 months, due to lower prices for energy and consumer goods following government moves to reduce the cost of living reduction.
• The Ministry of Labour is preparing to announce an increase in the minimum wage in December, but it is not expected not to reach 400 baht a day as Prime Minister Srettha Thavisin had said earlier. Current rates range from 328 to 354 baht, depending on the province.
• Shares of JKN Global Group plunged by nearly 30% to a floor of 0.77 baht on Thursday after the owner of the Miss Universe Organization announced it had filed for business rehabilitation with the Central Bankruptcy Court to resolve a "liquidity problem".
• The Board of Investment reported 31% growth in investment promotion applications in the first nine months of 2023, for projects valued at more than 500 billion baht.
• The Consumer Confidence Index in October rose to a 44-month high of 60.2, the University of the Thai Chamber of Commerce reported, attributing the gain to confidence in the economy's recovery towards pre-pandemic levels.
• The SEC and the SET affirmed that short selling does not cause severe stock price drops and that prohibiting short-selling would interfere with the market mechanism. They also said high-frequency trading programs from foreign countries have not been the cause of market weakness.
• The Ministry of Finance is preparing to adjust the threshold for tax-free shopping to claim a VAT refund to reduce congestion at airports and stimulate spending; a proposal to the cabinet is expected within two weeks.
• The Industry Minister has ordered a follow-up on the progress of companies holding concessions for potash mining, amid concerns about the environmental impact. A suggestion has been made to create new cities specifically to accommodate mining activities.
• The cabinet has approved twice-monthly payment of civil servant salaries but participation is voluntary, after some said they preferred being paid once a month. Those wishing to join can apply from Dec 1-15.
• The government has announced a "soft power" plan to generate 4 trillion baht within four years. It will set up the Thailand Creative Content Agency, which will train 20 million people and develop 11 creative industries to push Thai "soft power" onto the world stage.
• Thai Airways International reported a fourth-straight quarterly profit as passenger numbers continued to improve, with extra impetus from China. Net income for the three months through September was 1.54 billion baht, rebounding from a loss of 4.79 billion a year earlier.
• Investors are advised to increase their investments in global bonds, healthcare stocks and gold during the remainder of 2023 as risks rise from the Mideast war and high interest rates, says Tisco Wealth.

COMING UP: The US will release October consumer inflation and the SME confidence index on Tuesday. The EU will report third-quarter GDP and the November economic confidence index the same day. Locally, Monday is the last day for listed companies to report their third-quarter earnings.

STOCKS TO WATCH: InnovestX Securities sees limited upside for the SET in the short term as there are no new catalysts, while events in the Middle East need to be monitored. It recommends selective buys based on themes with specific drivers.

• The first theme includes big-cap stocks expected to recover in line with the market, and undervalued stocks that have been oversold. Top picks are BDMS, CPALL, CPN and MINT. The second group comprises stocks expected to report good fourth-quarter profit growth: AP, AOT, BCH, CENTEL and KCE. Finally, it recommends stocks expected to benefit from oil prices if they rise or stay at the current high level: BCP and PTTEP.
• Finansia Syrus Securities recommends selective buying of stocks with strong earnings momentum, and waiting for an opportunity to accumulate for long-term investment. Interesting stocks for November are AOT, BH, CENTEL, CPN and SISB.

TECHNICAL VIEW: Finansia Syrus Securities sees support at 1,320 points and resistance at 1,420. InnovestX sees support at 1,380 and resistance at 1,430.