Asian shares advance on China stimulus hopes

Asian shares advance on China stimulus hopes

MARKET MONITOR

An investor monitors share prices at a securities brokerage company in Bangkok. (Photo: Pornprom Satrabhaya)
An investor monitors share prices at a securities brokerage company in Bangkok. (Photo: Pornprom Satrabhaya)

RECAP: Stocks in Asia recorded a third straight weekly gain before many markets closed for Chinese New Year, after a flurry of stimulus announcements from China as it attempted to stem a severe equity market slump.

Thai shares moved in a range of 1,379.86 and 1,403.80 points this week, before closing on Friday at 1,388.37, up 0.31% from the previous week, with daily turnover averaging 37.13 billion baht.

Retail investors were net buyers of 1.64 billion baht. Brokers were net sellers of 982.83 million, followed by institutional investors at 483.31 million and foreign investors at 169 million baht.

NEWSMAKERS: Mexico has overtaken China as the top source of US imports, a position the latter had held since 2008, trade data released by Washington showed. Mexico last year accounted for 15.4% of all US imports by value, against 13.9% for China.

  • Inflation in China decreased by 0.8% year-on-year in January, the fourth month of decline and the sharpest drop in 15 years, further highlighting the risk of deflation in the world's second largest economy.
  • The US trade deficit narrowed last year to the lowest in three years, at $773.4 billion, down 18.7% from $951.2 billion in the previous year.
  • US employers in January added 353,000 positions, beating forecasts, while the unemployment rate remained steady at 3.7%, indicating a healthy labour market and raising concerns that the Federal Reserve may maintain high interest rates longer than anticipated.
  • Neel Kashkari, president of the Minneapolis Fed, expects the central bank to cut rates two or three times this year, while Adriana Kugler, another Fed member, stressed the need for more data on inflation to build confidence before considering a rate cut.
  • Moody's downgraded the credit rating of New York Community Bank (NYCB) to junk status, citing the bank's failure to strengthen its capital base and erosion of depositor confidence. NYCB has struggled since acquiring the failing Signature Bank during an industry crisis last year.
  • Foreigners purchased a net ¥2.07 trillion (US$13.4 billion) worth of Japanese stocks in January, the seventh highest monthly amount on record, spurred by strong earnings.
  • Bitcoin mining consumed 121 terawatt-hours of power in 2023, roughly the same amount consumed by the 46 million people of Argentina, the Cambridge Centre for Alternative Finance reported.
  • Toyota Motor has raised its full-year operating profit forecast by nearly 9%, after its fiscal third-quarter earnings topped estimates thanks to a weaker yen and strong sales of high-margin cars and hybrid vehicles. Honda upgraded its profit forecast thanks to a strong dollar and healthy North American demand, while rival Nissan said its quarterly net profit almost tripled year-on-year to ¥325 billion.
  • SoftBank Group on Thursday recorded a net profit of ¥985.5 billion ($6.6 billion) in the October-December quarter, ending a streak of four consecutive quarters in the red, as the value of some investments gained ground.
  • Taiwan Semiconductor Manufacturing Co (TSMC) announced plans to build a second chip factory in southern Japan and raise the total investment there to more than $20 billion, to minimise geopolitical risks.
  • Maersk on Thursday reported a net loss of $442 million in the fourth quarter of last year, dragged down by a collapse of freight rates and its container liner division recording an operating loss of $920 million. It signalled uncertainty in its 2024 profit outlook due to the crisis in the Red Sea.
  • The Bank of Thailand on Wednesday left its benchmark interest rate unchanged at 2.50%, as expected and despite repeated calls from Prime Minister Srettha Thavisin to cut rates to revive faltering economic growth. It also reduced its 2024 GDP growth forecast to a range of 2.5% to 3%, from 3.2% earlier, citing slowing exports and production.
  • Inflation in January fell 1.1% year-on-year to a 35-month low, the fourth straight month of decline. Inflation is expected to fall further from February to April, due mainly to government moves to cut the cost of living through subsidies for fuel and electricity.
  • The Federation of Thai Capital Market Organisations (Fetco) said the investor confidence index for the next three months was 77.55 in January, a fall of 43.4% to a bearish zone, pressured by US interest rate uncertainty, inflation and domestic economic concerns.
  • Thai Airways International has placed a firm order for 45 Boeing 787 jets, with options potentially increasing the size of the deal to around 80 aircraft to serve rising travel demand, Reuters quoted industry sources as saying.
  • The Tourism Authority of Thailand (TAT) expects this year's Chinese New Year festival to generate 6.2 billion baht in tourism revenue, an increase of 366% from last year, with an estimated 177,000 Chinese tourists visiting the country.
  • The Credit Bureau estimates that household debt continued rising in 2023, with auto loan defaults exceeding 230 billion baht, up by 28%, and home loan defaults at 180 billion, with overdue payments of 178 billion baht, up by 31%.
  • Toyota Motor Thailand reported a 9% decline in the overall car market in 2023, with pickup truck sales dropping 32%. Chinese car manufacturers grew their market share from 5% to 11%, with the proportion of electric vehicle (EV) sales growing from 1% to 10%.
  • Prime Minister Srettha Thavisin said the committee in charge of the stalled digital wallet handout would review recommendations from the National Anti-Corruption Commission (NACC) about the programme at its next meeting. The NACC has made eight suggestions to prevent corruption or harm to the state or public interest.
  • Airports of Thailand (AOT) plans to invest 44 billion baht this year to expand Suvarnabhumi Airport and construct the third phase of Don Mueang Airport, preparing Suvarnabhumi to serve 65 million passengers, close to the pre-Covid level.
  • The Hire-Purchase Business Association reported an increase in motorcycle repossessions, with non-performing loans growing at a double-digit rate as the economic slowdown has hurt the income and debt repayment capability of the grassroots population. It also reported 7,000 more individuals per auction round for seized bikes.

COMING UP: The EU will issue an updated economic forecast on Monday. The US will report January inflation on Tuesday. Due Wednesday are UK inflation and Japanese fourth-quarter GDP. The EU will release fourth-quarter GDP on Thursday and the US will report January retail sales. Due Friday are US producer prices. Locally, the Thai Chamber of Commerce will release an updated consumer confidence index on Tuesday.

STOCKS TO WATCH: InnovestX Securities recommends defensive stocks that are expected to outperform the market with price gains beating the SET average year-to-date, including ADVANC, AOT, BDMS and TISCO.

  • For short-term investment of 3-4 months, it recommends high-quality dividend stocks during dividend season, stocks with expected yields of over 5% after deducting interim dividends, such as AP, BCP and KTB.
  • Asia Plus Securities recommends accumulating good fundamental stocks with high ESG ratings and potential profit growth. Picks include AMATA, CBG, GULF, CPAXT, CK, CRC, BJC, CPALL, PLANB, IVL, CKP, SCGP, STEC and BGRIM.

TECHNICAL VIEW: Globlex Securities sees support at 1,350 points and resistance at 1,400. ASL Securities sees support at 1,380 and resistance at 1,408.

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