Favourable US inflation report cheers investors

RECAP: Most Asian equity markets advanced yesterday, led by Japan, as US stocks reached fresh highs after the Federal Reserve's preferred inflation indicator met consensus forecasts.

Thai shares moved in a range of 1,364.31 and 1,401.14 points this week, before closing yesterday at 1,367.42, down 2.2% from the previous week, with daily turnover averaging 55.55 billion baht.

Retail investors were net buyers of 5.95 billion baht, followed by brokerage firms at 559.33 million. Foreign investors were net sellers of 5.89 billion baht, followed by institutional investors at 616.97 million.

NEWSMAKERS: The US personal consumption expenditures index rose 2.4% year-on-year in January, down from 2.6% in December. The Fed's preferred inflation gauge rose 0.3% on a monthly basis, but analysts believe the data could encourage the central bank to start cutting interest rates in June.

• US fourth-quarter 2023 GDP was revised to 3.2% year-on-year from an initial estimate of 3.3%, reflecting a downward revision to business investment.
• The bitcoin rally continues with prices approaching $61,500, as analysts expect it to test the record of $68,789 set in November 2021 amid high demand from exchange-traded funds. However, JPMorgan predicts the price will drop back to $42,000 in April after "halving" -- a process designed to slow the release of the tokens.
• The US Consumer Confidence Index fell to 106.7 from 110.9 in January, reflecting concerns in the labour market and political factors. Durable goods orders posted the largest decline since April 2020, and new home sales growth was below expectations at 1.8% year-on-year.
• January factory output in Japan fell 7.5% from the previous month, the largest decline since May 2020, another worrisome sign for an economy that entered a technical recession in late 2023.
• Japanese consumer inflation fell slightly less than expected in January, rising 2%. Core inflation remained near a two-year low as consumer spending slowed amid pressure from weakening economic conditions.
• Japan stands ready to take appropriate action against excessive exchange-rate moves, said Masato Kanda, vice-finance minister for international affairs, after the yen fell past 150 per dollar to within sight of its post-1990 low around 152.
• Japan will provide ¥732 billion ($4.86 billion) to Taiwan-based TSMC, the world's largest contract chipmaker, to assist in building its second semiconductor factory in Japan.
• The Chinese manufacturing purchasing managers' index (PMI) for February was 49.1, contracting for the fifth straight month, as sluggish demand continues to drag on economic growth.
• China's solar capacity growth could slow in 2024 to 31%, an industry association predicts, after a record 55% increase last year as the industry struggles with renewable power overcapacity.
• India's economy grew at its fastest pace in 18 months, expanding 8.4% year-on-year in the final quarter of 2023, led by strong manufacturing and construction activity.
• Russia has approved a six-month ban on gasoline exports starting from March 1 to stabilise oil prices amid increasing demand from consumers and farmers.
• Apple has finally cancelled an electric car project that had struggled for years to gain any momentum, redirecting some employees to work on AI projects.
• The Japanese retailer Aeon and drugstore chains Tsuruha and Welcia said they would merge their businesses by 2027 to form the country's largest pharmacy. Aeon also plans to spend about ¥102 billion to double its stake in Tsuruha to 26.6%.
• Bridgestone will end production and sales of tyres for commercial vehicles in China, the Japanese company said on Tuesday, focusing instead on high-performance tyres for passenger vehicles.
• Sony is laying off around 900 PlayStation staff, or about 8% of the unit's workforce, And has also cancelled a number of in-development games.
• German inflation fell for a second straight month in February, to 2.7% year-on-year and slightly lower than expected, which could encourage European Central Bank policymakers to start cutting rates around midyear.
• Hong Kong has axed three major property transaction taxes in a bid to revive the depressed housing market. The three types of stamp duty had been introduced more than a decade ago to curb speculation and rein in sky-high prices.
• The government aims to increase capacity at Suvarnabhumi airport to 150 million passengers a year by 2030, from 60 million now, as Prime Minister Srettha Thavisin signals a more aggressive push to turn the country into a regional aviation centre and one of the world's five largest cargo hubs.
• The government has pledged to attract the most investment in 20 years to compensate for "lost decades" in the logistics sector, said Prommin Lertsuridej, secretary-general to the prime minister.
• Thailand recorded a current account deficit of $200 million in January, after a surplus of $2.1 billion in the previous month, the Bank of Thailand said. Exports climbed 7.2% from a year earlier while imports rose 1.5%, creating a trade deficit of $1.1 billion.
• The Stock Exchange of Thailand is preparing to strengthen measures to control stock price fluctuations from automatic order matching to an auction system, with enforcement by the third quarter.
• The Securities and Exchange Commission expects new measures to control short selling and program trading to take effect in the second quarter. They include an auction circuit-breaker, auto-halt and amendments to securities laws to address naked short selling.
• The Bank of Thailand said more than three institutions have expressed interest in obtaining licences for digital, branchless banking. Licence recipients will be announced by mid-2025.
• The Manufacturing Production Index fell 2.94% year-on-year to 99.2 points in January as the country struggled with demand-related problems, notably the impact of the highest level of car seizures in five years, said the Office of Industrial Economics.
• The Real Estate Information Center (REIC) indicates 27 provinces had residential inventory of over 300,000 units valued at 1.55 trillion baht remaining from 2023 sales. Concern persists, especially about properties priced under 3 million baht in Bangkok and the outskirts.
• The Ministry of Energy intends to maintain electricity rates from May to August at 4.18 baht per kilowatt-hour (unit), supported by increased production of natural gas by PTTEP from the Gulf of Thailand starting from April.
• Electricity Generating Plc (Egco) is planning to invest 30 billion baht this year to increase group generating capacity by 1,000 megawatts.
• The Bank of Thailand will allow state banks to enter into joint ventures with the private sector to establish asset management companies to manage household debt and non-performing loans. The companies could receive transfers of debt of no more than 20 million baht per case, it said.
• The ratio of public debt to GDP stood at 62.23% at the end of January, up from 61.85% in the previous month, according to finance ministry data released on Friday.

COMING UP: On Monday, China will report services PMI. On Tuesday, the US will releases services PMI and Australia will report monthly retail sales. On Wednesday, the Bank of Canada will hold a policy meeting, Fed chairman Jerome Powell will begin two days of testimony before US lawmakers, and China will release February trade figures.

• On Thursday, the European Central Bank will hold an interest rate meeting and the US will update jobless benefit claims. Friday brings euro zone GDP and US non-farm payrolls. Locally, ttb on Monday will deliver its business outlook for 2024. On Thursday, the Cryptomind conference will address crypto trends.

STOCKS TO WATCH: Trinity Securities recommends overweight positions in Thai stocks given cheap valuations. It recommends four groups: Hotels: MINT, CENTEL and ERW; Retail: CPALL, CPAXT and BJC; Hospitals: BDMS, BH, BCH and PR9; and Communications: ADVANC and TRUE.

• InnovestX Securities recommends selective buys of stocks that are benefiting from a steady tourism recovery that is not yet reflected in share value, namely AOT and MINT. Also interesting are speculative stocks if the SET rises above 1,400 and buybacks to cover short positions take place, while a return of fund flows could help stocks with strong fundamentals. Top picks are AOT, KBANK, KTB and PTT.
• Finally, long-term investors should consider dollar-cost averaging as the SET index has fallen significantly, risk is low and stocks are undervalued. Picks include BBL, BDMS, BEM, CPALL, PTT and SCC.

TECHNICAL VIEW: DBS Vickers Securities (Thailand) sees support at 1,360 points and resistance at 1,396. Trinity Securities sees support at 1,340 and resistance at 1,410.