Asian shares dip but oil price plunge offers relief

RECAP: Asian shares eased back slightly yesterday as softer US economic data took some of the steam out of Wall Street, but plunging oil prices were good news for the inflation outlook.

Thai shares moved in a range of 1,377.69 and 1,422.68 points this week, before closing yesterday at 1,415.78, up 1.9% from the previous week, in daily turnover averaging 47.87 billion baht.

Foreign investors were net buyers of 1.89 billion baht, followed by brokers at 543 million. Retail investors were net sellers of 2.28 billion baht, followed by institutional investors at 149 million.

NEWSMAKERS: Oil prices headed for a fourth straight weekly loss after sinking into a bear market as signs of healthy supplies and rising stockpiles offset attempts by Saudi Arabia and Russia to keep declines in check. West Texas Intermediate traded near $73 a barrel after dropping more than 20% from a high in September.

• US inflation in October rose 3.2% year on year, below market expectations and supporting market anticipation of an end to the Federal Reserve's interest rate hiking cycle.
• The US Congress passed a temporary funding measure that will keep federal agencies operating until the new year, days before a threatened government shutdown. President Joe Biden was expected to sign the bill later on Friday.
• The US Producer Price Index in October slipped 0.5% month-on-month, the largest decline since April 2021, contrary to market expectations of an increase. Retail sales also decreased by 0.1% from September, the first downturn since March.
• The US Consumer Confidence Index dropped to 102.6 in October, its second-lowest level this year, from 104.3 in September.
• US crude oil inventories in the week to Nov 10 rose by 3.6 million barrels, exceeding expectations, as crude production in October reached a record high of 13.2 million barrels per day (bpd).
• Opec forecasts world oil demand for all of 2023 will increase by an average of 2.46 million bpd, or about 2%.
• US Treasury Secretary Janet Yellen pushed back on Moody's decision to cut its outlook on US debt to negative from stable, saying the US economy is strong and the Treasury market is both safe and liquid. Moody's flagged a significant budget deficit and a substantial reduction in debt repayment capacity.
• UK inflation in October slowed sharply to 4.6%, from 6.7% in September, easing concerns about further interest-rate increases.
• Japan's gross domestic product (GDP) shrank 2.1% year-on-year in the third quarter, far above expectations for a drop of 0.6% and a sharp reversal from the 4.5% growth in the prior quarter. Sticky inflation and a weak yen dented private spending, while demand for exports weakened.
• The retail giant Walmart reported a third-quarter profit of $453 million on sales of $160.8 billion, slightly above Wall Street's forecasts. But its full-year earnings guidance was slightly below estimates, as it reports evidence of subpar consumer spending.
• Alibaba Group has cancelled its plan to restructure and spin off its Cloud Intelligence Group. The decision follows a US government policy to ban the export to China of chips used in AI businesses, posing significant challenges for Chinese companies.
• Bitcoin, the world's largest cryptocurrency, rose more than 5% on Wednesday to $37,978, near a one-week high. It has risen about 125% so far this year, with recent gains prompted by an expected end of central bank rate-hiking cycles.
• Prices of new homes in China's 70 largest cities fell by 0.4% in October, the sharpest decline in eight years, signalling a severe downturn in the real estate market despite the government's efforts to revive demand in the sector.
• Cambodian Prime Minister Hun Manet and Chinese officials on Thursday launched the new China-backed Siem Reap-Angkor International Airport. Initially designed to handle 7 million passengers annually, it has plans to increase capacity to 12 million by 2040.
• The Thai government says it has successfully courted Amazon Web Services (AWS), Google and Microsoft to commit total investments of about 300 billion baht, including 200 billion from Google and Microsoft. Google will focus on cloud computing, while Microsoft plans to establish a data centre.
• Prime Minister Srettha Thavisin, in San Francisco for the Apec meetings, met Tesla executives and said the American EV leader has expressed interest in investing in Thailand. The company is preparing to visit three proposed factory locations, with a decision anticipated in the first quarter of 2027.
• Fitch Ratings has reaffirmed Thailand's sovereign credit rating at BBB+ with a stable outlook, but has cautioned that heavy stimulus spending will weaken the government's fiscal position in the short term.
• The Ministry of Finance has approved a new T-ESG fund, which will invest in stocks and debt instruments that meet ESG (environmental, social and governance) criteria. The fund, expected to debut on Dec 1, allows for a tax deduction of up to 100,000 baht per year. It is expected to draw in capital exceeding 10 billion baht.
• Thailand and Japan have agreed on a reciprocal visa-free scheme for their businesspeople visiting each other's countries, according to Prime Minister Srettha Thavisin.
• The Tourism Authority of Thailand (TAT) expects 2.04 million trips by Thai nationals during the Loy Krathong festival on Nov 27, up 10% from last year, with cash flow of 6.1 billion baht, up 5%.
• Binance, the world's largest crypto exchange, has formed a joint venture with Gulf Innova, a subsidiary of SET-listed Gulf Energy Plc, which has received SEC approval to operate a cryptocurrency exchange in Thailand starting early next year.
• The Federation of Thai Industries (FTI) said the industrial confidence index dropped for the fourth month in October to a 16-month low. It attributed the decline to the slow recovery of the domestic economy, as consumer purchasing power remains weak.
• The cabinet approved an increase of 2 baht per kilogramme in the factory gate price of sugar as a temporary solution to assist farmers. The hike is expected to raise costs for beverage companies and pressure margins if retail prices cannot be adjusted.
• The government expects to start the digital wallet handout of 10,000 baht per person in May 2024. It is also initiating an E-refund programme for those who do not receive digital wallet funds, in which taxpayers can deduct up to 50,000 baht for purchases of goods and services.
• The government plans to borrow 500 billion baht in phases over 2-3 years to finance the digital wallet handout to minimise the impact on its fiscal position, says Paopoom Rojanasakul, secretary to the finance minister.
• The National Broadcasting and Telecommunications Commission has conditionally approved the takeover of the 3BB broadband internet operator Triple-T Broadband by Advanced Info Service (ADVANC) to create a new market leader. Among the conditions attached, the merged entity must maintain the lowest pre-merger package prices for five years.

COMING UP: On Tuesday the US will release October home sales and the Fed will release minutes of its most recent meeting. On Wednesday the US reports October durable goods orders, weekly oil refinery utilisation and inventories, and the EU will release an updated consumer confidence index.

Due Thursday are October manufacturing PMI in the euro zone and October inflation in Japan. On Friday, the US will release manufacturing, services and composite PMI.

STOCKS TO WATCH: DAOL Securities expects stocks targeted by the new Thailand ESG Fund will include those with good fourth-quarter performance both this year and next, with prices that have lagged the market. They include IVL, SJWD, BGRIM, CBG, CBG, HMPRO, BEM, KTC, OR and CPALL.

• Maybank Securities (Thailand) says stocks expected to benefit from the e-Refund, aimed at stimulating domestic consumption and GDP growth, include HMPRO and COM7.
• InnovestX Securities recommends stocks within the SETESG index with AAA or AA ratings, and stocks for which prices have fallen sharply this year. Its top picks are TOP, CRC, SCGP, GULF and ZEN.

TECHNICAL VIEW: CGS-CIMB Securities (Thailand) sees support at 1,400 points and resistance at 1,460. Krungsri Capital Securities sees support at 1,400 and resistance at 1,430.