Red Sea tension, US inflation weigh on trade

RECAP: Equity markets in Asia were mixed yesterday as the escalating conflict in the Red Sea region sent oil prices surging, while slightly higher-than-expected US inflation data did not dent investors' views on early and aggressive rate cuts in the US and Europe.

Thai shares moved in a range of 1,407.26 and 1,428.44 points this week, before closing yesterday at 1,413.53, down 1% from the previous week, with daily turnover averaging 40.84 billion baht.

Retail investors were net buyers of 4.53 billion baht, followed by brokerage firms at 1.04 billion. Foreign investors were the net sellers of 4.17 billion baht, followed by institutional investors at 1.4 billion.

NEWSMAKERS: Oil prices jumped as the US and allies launched airstrikes against Houthi rebels in Yemen, stepping up retaliation for attacks on ships in the Red Sea. Brent crude rose 2.5% to $79 a barrel as investors tried to gauge the likelihood of a broader conflict in the Middle East.

• Almost a dozen US exchange-traded funds linked to bitcoin got off to a strong start on Thursday, with $4.6 billion worth of units changing hands. Industry backers see the ETFs as the ultimate springboard for broader mainstream adoption of cryptocurrency by everyday investors. Bitcoin pushed above $49,000 before slipping back to around $46,000.
• US headline inflation in December was 3.4% year-on-year and core inflation was 3.9%, both above forecasts, raising doubts about whether the Federal Reserve would start lowering interest rates as soon as March, as markets had hoped earlier.
• Microsoft on Thursday overtook Apple as the world's most valuable company, with a market capitalisation of nearly $2.9 trillion, after the iPhone maker began 2024 with its worst start in years due to growing concerns about demand.
• Samsung Electronics posted its sixth straight quarter of declining operating profit, reflecting weak consumer demand. Korea's largest company reported a 35% fall in operating income to 2.8 trillion won ($2.1 billion).
• The Disney-owned animation studio Pixar is poised to lay off staff this year, with sources saying the layoffs would be significant, possibly up to 20% of its 1,300 employees.
• Several major global tech companies have announced staff cuts as AI takes over more roles. They include Google, Amazon and Huawei in the US and Canada, as well as Lazada, the Southeast Asian e-commerce group owned by Alibaba.
• Saudi Aramco has cut the price of crude oil sold to Asian buyers for February delivery to the lowest in 27 months.
• Argentina's annual inflation rate reached 211.4% in December, confirming the depth of the economic crisis facing the country. The rate is the worst since 1991, when Argentina was exiting a period of hyperinflation.
• Chinese consumer prices fell for a third month in December, shedding 0.3% from a year earlier. The producer price index contracted 2.7% in December after a 3% fall in November, marking the 15th straight month of declines.
• The World Bank warned on Tuesday that global growth in 2024 is set to slow for a third year in a row. IT predicts GDP expansion of 2.4%, compared to 2.6% in 2023, 3% in 2022 and 6.2% in 2021 when there was a rebound as the pandemic ended.
• Chinese auto exports surged 57.9% to a record high of 4.91 million vehicles in 2023 as the country's carmakers expanded their presence overseas, the China Association of Automobile Manufacturers said.
• Fast Retailing, the owner of the Uniqlo clothing brand, posted a 25% jump in first-quarter operating profit on Thursday, fuelled by strong overseas sales as it charts a third-straight year of record earnings.
• Thailand's Consumer Confidence Index rose in December for the fifth month to a 46-month high, thanks to government electricity and fuel subsidies, as well as measures to stimulate the economy and increased political stability, said the University of the Thai Chamber of Commerce.
• The Energy Regulatory Commission has finalised the power tariff for the January-April period at 4.18 baht per kilowatt-hour (unit), though customers who consume less than 300 units a month will pay 3.99 baht. The rate is a reduction from 4.68 baht proposed earlier, after the government pressed the regulator to help cut expenses for households and businesses.
• Shares of Italian-Thai Development (ITD) plunged by more than 12% on Monday as the contractor said it was planning to postpone for two years the payment of its five tranches of debentures worth a combined 14.5 billion baht.
• The Thai Bond Market Association says long-term bonds maturing in 2024 amount to 890 billion baht, with 790 billion baht (91%) rated investment grade and 99 billion baht (9%) as high-yield. After some defaults in 2023, investors are becoming more cautious.
• The Ministry of Finance is preparing to set up a joint-venture asset management company (AMC) with the Government Savings Bank holding 50%, within the first quarter. It hopes to resolve 3 million non-performing loans totalling 200 billion baht by reducing payments.
• The Thailand Futures Exchange (TFEX) will extend trading hours of its night session for all currency products until 3am and eliminate the intermission during the day session for all precious metals products, starting from Jan 15.
• The Federation of Thai Capital Market Organizations (Fetco) reported an increase in the investor confidence index for the next three months of 38.9% from the previous survey, on the back of capital inflows.
• The Thai National Shippers' Council (TNSC) forecasts a rebound in exports this year with growth of 1-2%, but warns of risk factors including baht value, high interest rates, geopolitical conflicts, stagnant manufacturing and uncertain production costs.
• The Federation of Thai Industries (FTI) says local automobile production could reach 2 million units this year, potentially increasing exports. However, several risks in both domestic and international markets need to be monitored.
• Consumer prices contracted in December for a third straight month, with the 0.83% decline the largest in 34 months. This brought average core inflation for 2023 to 1.23%.
• The baht weakened 1.3% at midweek after Prime Minister Srettha Thavisin said the Bank of Thailand should cut interest rates in light of negative inflation. He and the central bank governor subsequently met and Mr Srettha said afterward that he "just explained" his views and would not interfere.
• The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) said it hoped the Bank of Thailand would not increase policy rates further. The Government Savings Bank reduced its minimum retail loan rate from 6.995% to 6.845%.
• Thailand's economy is expected to grow by 2.8% to 3.3% in 2024, according to the JSCCIB. It estimated the economy expanded 2.5% to 3.0% in 2023, after 2.6% growth in 2022.
• The Ministry of Finance has confirmed the digital wallet stimulus will begin on May 1 after the Council of State said the government can issue loans under the Fiscal Discipline Act to fund the programme.

COMING UP: The EU will release November trade figures on Monday and the January economic confidence index on Tuesday. China will report fourth-quarter 2023 GDP on Wednesday, the EU will release December inflation and the US will report December retail sales.

• Locally, commercial banks will be the first to report fourth-quarter earnings this week. On Tuesday, InnovestX Securities will discuss the 2024 economic outlook. The Ministry of Commerce will also release a report on international trade conditions.

STOCKS TO WATCH: Land and Houses Securities recommends several investment themes, including firms benefiting from an increase in electricity prices: BGRIM, GPSC and GULF. Property firms expected to be boosted by economic stimulus include AP, SPALI, SIRI, SC, ORI, BRI, LH and QH. Tourism and related stocks expected to gain from the visa-free policy for Chinese visitors include AOT, AAV, BA, BTS and BEM; the hotel groups AWC, ERW, CENTEL and SPA; and hospitals that focus on foreign patients, namely BDMS and BH.

• InnovestX Securities recommends selective buying of stocks benefitting from the January Effect, a month in which the SET has outperformed its annual average return from 2011-22, including AOT, KTB, KBANK and DIF.
• Stocks benefitting from declining bond yields include commerce (CPALL, CPAXT), healthcare (BDMS), utilities (GULF), property (AP) and consumer finance (TIDLOR). Beneficiaries of the Easy E-Receipt measure include CRC, HMPRO, ZEN, MINT and ADVANC.

TECHNICAL VIEW: Globlex Securities sees support at 1,400 points and resistance at 1,450. InnovestX Securities sees support at 1,390 and resistance at 1,445.