Asian shares retreat as US rate-cut prospects dim

RECAP: Asian equities declined on Friday and the dollar traded near a two-year high as investors continued to fret about the likelihood of fewer US interest rate cuts in the coming year.

The Thai index fell below 1,400 points on Tuesday and remained there all week, pressured by selling of stocks in the CP Group and a shift in market expectations of US rate cuts.

The SET index moved in a range of 1,361.34 and 1,424.68 points this week, before closing on Friday at 1,365.07, down 4.7% from the previous week, with daily turnover averaging 54.16 billion baht.

Retail investors were net buyers of 10.7 billion baht. Institutional investors were net sellers of 7.7 billion baht, followed by foreign investors at 2.1 billion and brokerage firms at 931.3 million.

NEWSMAKERS: The US Federal Reserve cut its key interest rate on Wednesday by a quarter-point as expected but also signalled it expects to reduce rates more slowly next year than previously envisioned, mostly because of still-high inflation. Latest projections indicate rates could fall by just 50 basis points in 2025.

• The US economy grew faster than previously estimated in the third quarter, driven by robust consumer spending. GDP increased at an upwardly revised 3.1% annualised rate.
• The Bank of England on Thursday left its policy rate unchanged at 4.75% as expected as inflation rose to an eight-month high of 2.6%, adding to fears that the economy will enter the new year burdened by stagflation.
• The yen plunged to a five-month low at 155 to the US dollar on Thursday after Bank of Japan kept its policy rate unchanged at 0.25% and governor Kazuo Ueda was non-committal on the timing of the next rate hike.
• China left its benchmark lending rates unchanged on Friday, matching market expectations, as falling yields, shrinking net interest margins and a weakening yuan create limits for monetary easing.
• New Zealand tipped into recession in the third quarter, with sentiment weighed down by high prices, elevated borrowing costs and a housing crisis. GDP fell by 1%, the second quarterly contraction in a row.
• US President-elect Donald Trump on Thursday threatened the European Union with tariffs if its member countries don't buy more American oil and gas.
• Indonesia's central bank kept its interest rate unchanged to support the rupiah, which fell past the key support of 16,000 to the dollar.
• China's oil consumption is set to peak by 2027 and then start declining, the state refining giant Sinopec said on Thursday. Weakening diesel and gasoline demand in the world's biggest oil importer has rattled global oil markets this year.
• More than 33 million foreign travellers visited Japan from January to November, exceeding the 12-month record set in 2019, the Japan National Tourism Organization said.
• Nissan Motor is in talks with Japanese rival Honda Motor Co about merging, in a deal that would help the ailing Nissan survive, while also creating the world's third-largest automaker with a better chance of withstanding industry challenges.
• Foxconn, the Taiwan-based iPhone maker, is in talks with the French automaker Renault, the biggest shareholder of Nissan, to buy its stake, Taiwanese media reports said.
• Contemporary Amperex Technology Co Ltd (CATL), the world's top EV battery maker, is considering a second listing in Hong Kong that could raise at least $5 billion, the city's biggest since early 2021.
• Apple is reportedly close to receiving a licence to sell the iPhone 16 in Indonesia after pledging a $1-billion investment in manufacturing there.
• India is likely to impose a safeguard duty or temporary tax of up to 25% on steel imports to help to curb cheap imports from top producer China.
• The Bank of Thailand on Wednesday kept its policy interest rate steady at 2.25%, warning of rising future uncertainties as it resists government calls for further interest rate cuts.
• Share prices of CP Axtra Plc (CPAXT), the wholesale and retail business unit of the CP Group, and parent CP All plunged on Monday and Tuesday after CPAXT announced an investment of nearly 8 billion baht in the real estate joint venture Happitat at the Forestias. The latter is being developed by a non-listed unit of the CP Group.
• Toyota Motor Corp chairman Akio Toyoda has pledged to invest 55 billion baht in Thailand to expand production of hybrid cars, Industry Minister Akanat Promphan said on Wednesday.
• The Ministry of Finance plans to propose an Easy e-Receipt programme next week to the cabinet, allowing personal income tax deductions of up to 50,000 baht per person for the 2025 tax year. This is seen as positive for commerce stocks.
• Agricultural GDP is expected to contract 1.1% this year due to volatile weather and floods, but should rebound in 2025 to growth of between 1.8% and 2.8% on increased output, sufficient water and higher export volume, says the Office of Agricultural Economics.
• The Thai Industrial Confidence Index in November rose to 91.4, the highest in eight months, with accelerating orders, robust exports and a weaker baht enhancing competitiveness.
• The cabinet has approved zoning for 2,662 rai in the Eastern Economic Corridor in Rayong for an entertainment complex project.
• The Ministry of Tourism and Sports said 33.4 million foreign tourists have entered Thailand so far this year, growth of 27% year-on-year. Indian tourists reached a new high of 2 million.
• Taiwan-based Compeq, the world's fifth largest printed circuit board (PCB) maker, plans to invest over 10 billion baht to establish Thailand as a key manufacturing base, said the Board of Investment.

COMING UP: On Monday, the UK releases quarterly GDP and the US reports consumer confidence. On Tuesday, the US announces durable goods orders and new home sales and the Bank of Japan updates inflation data. On Thursday, the US reports jobless claims. On Friday, Russia announces monthly GDP and the oilfield services firm Baker Hughes updates the US rig count.

• Locally, the cabinet on Tuesday will consider the Easy e- Receipt programme, which will reduce tax on purchases of up to 50,000 baht in early 2025.

STOCKS TO WATCH: InnovestX Securities recommends high-dividend yield stocks that will be targets of the Vayupak Fund and tax-deductible funds, particularly ADVANC, AP, BBL, BDMS and HMPRO.

• Also recommended are stocks benefiting from government consumption and tourism stimulus, especially Commerce stocks CRC, HMPRO and TNP, and Tourism plays AWC, AOT and MINT. Stocks expected to post earnings growth in Q4 include GULF, OSP, AMATA, AU, TIDLOR and BCP. If the Easy e-Receipt is approved, beneficiaries could include CRC, BJC, TNP, ERW, AWC, CENTEL, MINT, OSP and CBG.
• Yuanta Securities (Thailand) has a positive view of domestic plays in banking, consumer goods and food and beverages. Recommended are SCB, KBANK, BBL, TTB, CPALL, CPAXT, BJC, CRC and OSP.

TECHNICAL VIEW: Kasikorn Securities sees support at 1,360 points and resistance at 1,390. RHB Securities (Thailand) sees support at 1,355 and resistance at 1,380.