Asian equities mixed despite gains in Japan
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Asian equities mixed despite gains in Japan

RECAP: Asian equities were mixed on Friday, with Japanese shares surging following the Bank of Japan's decision to delay a reduction in bond buying. However, Chinese and Australian market weakness dragged down the overall MSCI Asia Pacific Index.

Thai shares fell to near 1,300 points, as investors stayed on the sidelines ahead of three political cases next Tuesday. Analysts say that if the index slips below that key resistance, it could plunge to a new low.

The SET index moved in a range of 1,304.31 and 1,329.81 points this week, before closing on Friday at 1,306.56, down 2% from the previous week, with daily turnover averaging 40.39 billion baht.

Retail investors were net buyers of 7.23 billion baht, followed by institutional investors at 1.52 billion. Foreign investors were net sellers of 8.66 billion baht, followed by brokerage firms at 85.5 million.

NEWSMAKERS: The United States Federal Reserve (Fed) left its key lending rate unchanged on Wednesday and pencilled in just one rate cut this year, down from the three expected in March, after data showed inflation stalling.

  • US consumer inflation in May was 3.3% year-on-year, unchanged from a month earlier and lower than market expectations. The Producer Price Index was also lower than expected, growing by 2.2%.
  • The Bank of Japan said it would start trimming its huge bond purchases, in a move towards policy normalisation after years of massive monetary stimulus. Details of a tapering plan for the next 1-2 years will be announced in July.
  • The world is likely to have a "staggering" oil surplus of 8 million barrels per day (bpd) by 2030 as production is ramped up while the clean energy transition causes global demand to level off at around 106 million bpd, 6% above current levels, the International Energy Agency said. Opec paints a very different picture, predicting demand will keep rising to 116 million bpd by 2045.
  • The EU will apply new duties of up to 38.1% on Chinese EVs next month, saying they benefit unfairly from subsidies. China has criticised the move but has not announced any retaliatory measures yet.
  • The People's Bank of China halted gold purchases for reserves in May after 18 consecutive months of buying, as spot gold prices hit record highs.
  • South Korea has extended its ban on short-selling until March 2025 and plans stricter penalties, including fines and imprisonment of up to life for illegal short-selling.
  • Marubeni Corp of Japan has acquired a 20% stake in Amata City Halong JSC, the operator of an industrial park in Vietnam, from Amata Vietnam, a subsidiary of SET-listed Amata Corp.
  • The Malaysian government is ending diesel fuel subsidies to reduce government spending by 4 billion ringgit a year and curb illegal fuel smuggling out of the country, which has caused billions in losses.
  • The Bank of Thailand on Wednesday left its key interest rate unchanged at 2.5% for a fourth straight meeting, despite calls by the government to cut borrowing costs to help revive the economy.
  • Inflation as measured by the Consumer Price Index (CPI) rose to a 13-month high of 1.54% year-on-year in May. But for the first five inflation was down 0.13% year-on-year.
  • The number of factory closures in the country has been rising, particularly since the second half of last year, say researchers at Kiatnakin Phatra Financial Group. The average number of closures per month rose from 57 in 2021 to 83 in 2022 and 159 in the second half of 2023, it said.
  • The property market is also wobbling: The number of land allocation permits nationwide dropped by 19.7% in the first quarter, the largest decline in nine quarters, as developers adjusted after seeing a consecutive dip in low-rise house transfers, said the Real Estate Information Center.
  • The Bank of Thailand on Thursday announced stricter regulations targeting nominee deposit accounts, also known as mule accounts, under which criminals hire others to open accounts or allow others to use mobile banking for illegal transactions.
  • Suzuki Motor Corp will close its 800-employee Rayong auto assembly plant by the end of 2025 as part of a global restructuring. The Japanese company said it saw more potential for making EVs in other markets than making combustion-engine cars in Thailand where its market share is small.
  • The cabinet is preparing to announce investment incentives under the EEC Act this month, with 30 companies in line for privileges worth 210 billion baht across five sectors in the Eastern Economic Corridor.
  • Prime Minister Srettha Thavisin has asked the Ministry of Energy and the Board of Investment to work out ways for the private sector to directly buy and sell electricity from clean and renewable energy producers.
  • The Energy Ministry estimates the average electricity tariff under the revised power development plan will be 3.87 baht per unit, compared with 4 baht now. Clean energy sources including hydropower would account for 51% of electricity generation, natural gas 41%, and coal/lignite 7%.
  • The Thailand Futures Exchange signed an agreement with the Rubber Authority of Thailand to establish standardised rubber reference prices.
  • Thailand had 15.5 million international tourist arrivals from Jan 1 to June 9, generating around 736 billion baht in revenue. The top five source markets were China, Malaysia, India, Russia and South Korea.
  • SET-listed JKN Global says it plans to repay all its liabilities owed to bondholders within five years after a strategic investor, Mexican businessman Raul Rocha Cantú, agreed to inject 1.75 billion baht to revive the debt-ridden owner of Miss Universe Organization.

COMING UP: On Monday, the euro zone releases its annual wages survey. On Tuesday, the Reserve Bank of Australia has a rate meeting, the euro zone releases inflation and economic sentiment updates, while the US reports retail sales and industrial production, and Japan releases trade data.

  • On Wednesday, the UK reports inflation, New Zealand releases quarterly GDP and China announces five-year loan prime rates. On Thursday, the Swiss and UK central banks have rate meetings, the US reports initial jobless claims and an updated manufacturing index, and Japan releases inflation data. On Friday, the US reports manufacturing PMI and existing home sales.
  • Locally, Tuesday features three key legal events: the Constitutional Court consideration of an ethics complaint against Prime Minister Srettha Thavisin and the dissolution case against the opposition Move Forward Party. Meanwhile, former PM Thaksin Shinawatra will report to prosecutors in connection with a lese-majeste case.

STOCKS TO WATCH: Asia Plus Securities says political jitters caused the SET index to shed 73 points in May, and investors should focus on stocks with strong fundamentals, high dividends and/or unique supporting factors, such as ADVANC, TU, PTTEP and BEM. If the SET index can stay above 1,330 points, gradually increase investments.

  • Trinity Securities expects foreign investors to continue selling Thai shares, reflected in the weaker baht. Its top picks for June are BJC, BDMS, BCH, CHG, COCOCO, MALEE, PLUS and TU. But investors should exercise caution "until the political direction becomes clearer", it adds.

TECHNICAL VIEW: Bualuang Securities sees support at 1,260 points and resistance at 1,370. Asia Plus Securities sees support at 1,275 and resistance at 1,330.


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