Asian equities gain for fourth straight week

RECAP: Asian markets recorded their fourth consecutive weekly gain after Wall Street, Paris and Frankfurt rallied to record highs, as traders shrugged off data showing mild recessions in Britain and Japan, and weak US retail sales.

Thai shares moved in a range of 1,378.76 and 1,397.80 points this week, before closing yesterday at 1,386.27, down 0.2% from the previous week, with daily turnover averaging 38.89 billion baht.

Retail investors were net buyers of 4.82 billion baht. Foreign investors were net sellers of 4.18 billion, followed by brokerage firms at 517.53 million and institutional investors at 123 million baht.

NEWSMAKERS: US inflation in January rose 3.1% year-on-year, above forecasts of 2.9%, though it eased from 3.4% in December. The figure was still considered too high to warrant the Federal Reserve cutting interest rates. Analysts now believe the first reduction is unlikely before June.

• Japan's economy has slipped into fourth place worldwide behind that of Germany, after unexpectedly entering a technical recession. GDP shrank by 0.4% year-on-year in the fourth quarter, following a 2.9% contraction in the third quarter. However, the economy grew by 1.9% for all of 2023.
• The UK economy contracted in the fourth quarter by 0.3% year-on-year, the second quarter of decline, indicating a technical recession. Inflation remained steady at 4% in January, but the Bank of England doused speculation about interest-rate cuts anytime soon.
• US retail sales fell 0.8% in January, breaking a two-month streak of increases, with the decline larger than economists' expectations of a 0.1% drop.
• Opec forecasts global oil demand this year will increase by 2.25 million barrels per day (bpd), or about 2%, and by another 1.85 million bpd in 2025.
• Bitcoin was trading near $52,000 yesterday, after topping $50,000 earlier in the week for the first time in over two years, a remarkable comeback from the crypto scandals and wipeouts that cast doubt on the industry's viability.
• Gold fell below $2,000 an ounce to a 2-month low, as investors assessed comments from two Federal Reserve officials about unexpectedly high January inflation that dimmed hopes for rate cuts.
• The US dollar strengthened past 150 yen on Tuesday in New York for the first time since November, amid expectations that the interest rate differential between Japan and the United States could remain wide for longer.
• Japan's Nikkei index pushed above 38,000 points this week for the first time in 34 years amid a buying spree led by tech profit projections.
• China said new yuan loans in January totalled 4.9 trillion yuan, exceeding market expectations of 4.5 trillion, with total credit growth rising 10.4%.
• The Japanese semiconductor firm Renesas Electronics announced plans to acquire the Australian software company Altium Ltd for A$9.1 billion (US$5.9 billion). Renesas earlier this year took over the US power semiconductor firm Transphorm to boost its presence in chips for electric vehicles.
• Toyota Motor said on Tuesday that both the president and chairman of its compact-car unit Daihatsu would step down to take responsibility for a long-running safety test-rigging scandal that led to a suspension of all shipments.
• The stock market index compiler MSCI will remove 66 companies from its benchmark China index after a prolonged selloff and volatile trading. The deletions will include China Southern Airlines, Weibo and China Everbright Environmental Group.
• The Chinese automaker BYD, the world's largest EV seller, is scouting locations in Mexico for a factory to export to the US, sources said this week.
• China and Indonesia aim to reduce nickel production by a total of 100,000 tonnes this year to stem losses after nickel prices fell. They plan further production cuts if producers wish to boost prices and reduce the market surplus.
• The South Korean internet company Kakao Corp reported record sales of 8 trillion won ($6 billion) last year, but said operating profit fell 10.9% to 501.9 billion won.
• Malaysian economic growth slowed last year to 3.7%, below the target of 4-5%, due to prolonged weakness of external demand, the central bank said yesterday.
• Thai Airways International confirmed on Wednesday that it had placed an order with Boeing for at least 45 aircraft, saying the deal will not affect ongoing repayment plans under its debt rehabilitation process.
• The baht slipped below 36 to the US dollar on Wednesday and is likely to depreciate further as US inflation was higher than forecast, prompting the market to believe the Fed might further delay its first interest rate cut.
• Prime Minister Srettha Thavisin has urged the Revenue and Customs departments to speed up efforts to stop cheap products from China from flooding the domestic market, including revoking the VAT waiver on Chinese products worth less than 1,500 baht. The Ministry of Finance is also looking to improve tax collection methods to reduce "leakage".
• The board overseeing the government's stalled digital wallet programme has set up a panel to review all questions related to funding and other concerns. It is due to report back in 30 days. Mr Srettha insists the rollout of the 10,000-baht handout is still within the government's expected timeframe.
• The cabinet approved an additional 560 billion baht in new borrowing for fiscal 2024, bringing total new borrowing for the year to more than 754 billion, as part of a revised public debt management plan.
• The government plans to offer visa-free travel to citizens of several more countries, Prime Minister Srettha said yesterday. He said waivers for citizens of China and India have already started to make a positive difference.
• Mr Srettha is looking to start negotiations with Cambodia to develop petroleum resources in the Gulf of Thailand, saying talks should focus on sharing benefits rather than the boundary dispute in the overlapping claims area that has held up progress for two decades.
• The Ministry of Tourism reported 872,235 international arrivals during the Chinese New Year festival from Feb 5-11, an increase of 13.3% from a week earlier.
• The Stock Exchange of Thailand is preparing to discuss with the Securities and Exchange Commission four short- and long-term measures to regulate short-selling and program trading transactions that have led to increased market volatility.
• Steel manufacturers are pinning their hopes on new and existing state infrastructure development projects to boost sluggish steel consumption, says Chaichalerm Bunyanuwat, president of the EAF Long Product Steel Producers Association.
• Domestic gold prices, which peaked at 34,550 baht per baht-weight over Chinese New Year, should be on an uptrend again in May when the Federal Reserve is expected to start cutting US interest rates, pushing global prices to $2,100 per ounce, say traders.
• More than 1,000 digital platform service operators have registered with the Electronic Transactions Development Agency (ETDA) system, in line with the new digital platform service law intended to promote consumer protection.

COMING UP: On Monday, the People's Bank of China will announce the loan prime rate and the Reserve Bank of Australia will release meeting minutes. On Tuesday, Japan will report January trade data and the US will release Conference Board leading economic indicators. Minutes from the January Fed meeting will be released on Wednesday.

• Due on Thursday are euro zone inflation, US manufacturing PMI, existing home sales, crude oil inventories and the Fed balance sheet.
• Locally, the National Economic and Social Development Council will announce official 2023 economic growth figures on Monday. On Tuesday, the SET will hold a briefing about updated program trading rules. Due Wednesday is an updated Industrial Confidence Index.

STOCKS TO WATCH: Asia Plus Securities says lack of clarity about when the government's digital wallet programme will start has pushed down prices of domestic consumption plays, such as CPALL and CPAXT.

• The brokerage recommends investing in real-sector stocks that have already announced Q4 results and have signalled profit improvements in the current quarter. They include SCCC, ADVANC, INTUCH, AOT, DRT, GULF, MINT, ITC, CPAXT, JMT, JMART, SCC, GPSC, IRPC and TOP.
• Finansia Syrus Securities recommends firms reporting fourth-quarter profit increases from the year before, with strong balance sheets and low PE and PBV ratios compared to the pre-Covid period. Interesting stocks are CPALL, ITEL, MINT, PR9 and TU.

TECHNICAL VIEW: Asia Plus Securities sees support at 1,365 points and resistance at 1,420. InnovestX Securities sees support at 1,350 and resistance at 1,400.