Tech-led rally lifting equities worldwide

RECAP: Most Asian equity markets gained for a second day on Friday, as a global rally led by technology stocks pushed markets from the US to Europe and Japan to all-time highs.

Thai shares moved in a range of 1,376.65 and 1,405.13 points this week, before closing on Friday at 1,398.14, up 0.9% from the previous week, with daily turnover averaging 47.76 billion baht.

Foreign investors were net buyers of 10.89 billion baht. Retail investors were net sellers of 7.33 billion, followed by institutional investors at 2.91 billion and brokerage firms at 650.22 million baht.

NEWSMAKERS: The $277-billion one-day rise in the market capitalisation of the chipmaker Nvidia was the biggest single-session increase in history, US market data showed. Record earnings and a buoyant outlook spurred by demand for all things AI have led the company to forecast revenue of $24 billion in the current quarter, well above analysts' forecasts.

• The Dow Jones index finished above 39,000 points for the first time on Thursday following mammoth earnings from Nvidia. The broad-based S&P 500 also jumped 2.1% to a record 5,087.03.
• Most US Federal Reserve officials cautioned against cutting interest rates too quickly as they continue to look for convincing evidence that inflation is returning to their 2% target, according minutes of the Jan 31 meeting.
• US producer prices in January rose 0.9% year-on-year, with the core index up 2%, higher than expected and adding to speculation that the Fed will postpone its first rate cut.
• The US composite purchasing managers' index (PMI) declined to 51.4 from 52 in January but remained above the 50 mark that separates expansion from contraction.
• The People's Bank of China on Tuesday cut a key benchmark lending rate used to price mortgages to 4.2% to 3.95%, as Beijing seeks to rescue its housing market from a deepening crisis.
• China presented its first domestically produced passenger jet at the Singapore Airshow this week. The Comac C919 aircraft will seek to challenge the decades-long dominance of top planemakers Airbus and Boeing while reducing Chinese reliance on foreign technology.
• Grab Holdings Ltd plans to buy back as much as $500 million of stock after reporting its second straight profit on an adjusted basis, reflecting the Southeast Asian ride-hailing leader's effort to win shareholders over during a market slowdown.
• Japan's government downgraded its view on the economy in February for the first time in three months on sluggish consumer spending, suggesting a bumpy path out of a recession in the face of slow wage recovery and lacklustre industrial output.
• Japan's exports grew more than expected in January, rising 11.9% year on year, the Finance Ministry reported. The improvement keeps the door open for the Bank of Japan to end its negative-rate policy.
• Indonesia's central bank kept its main policy rate unchanged at 6% on Wednesday, as expected, saying current levels were consistent with efforts to keep the rupiah stable and ensure inflation remains within target.
• The Malaysian ringgit continues to trade near its lowest level since the 1998 Asian financial crisis, prompting the central bank to say it does not reflect the improving outlook for the economy. The currency on Tuesday slipped past 4.8 against the US dollar, its weakest level since reaching an all-time low of 4.885 in 1998.
• HSBC reported a record US$30 billion pretax profit for 2023, but its shares still tumbled on Wednesday because fourth-quarter numbers were marred by several charges totalling nearly $6 billion. Net profit surged 56% last year to $22.4 billion.
• Lenovo announced plans to launch its first PC equipped with AI capabilities by midyear, after posting a 23% decline in net profit during the last quarter of 2023 amid a significant downturn in the PC market.
• Google has told suppliers to start making its Pixel smartphones in India by the next quarter at the earliest, as part of a bid to further diversify its supply chain away from China.
• Capital One, the third-largest US issuer of Visa and MasterCard credit cards, is acquiring Discover Financial Services for $35.3 billion in an all-stock deal.
• Chinese travellers flocked to tourist hot-spots across Asia over the Lunar New Year break, with visitor numbers and spending in destinations including Thailand, Singapore and Malaysia exceeding pre-Covid levels, say major Chinese tour operators.
• The Thai government will sell savings bonds worth 100 billion baht within the fiscal year to Sept 30, with the first issue worth 40 billion baht to be offered next month to help finance the budget deficit, says the Public Debt Management Office.
• The baht, now trading close to 36 to the US dollar, could slide to 37 later this year as a weakening Thai economy and a delay in US interest rate cuts pressures the Thai currency, says Kasikorn Research Center.
• Thai exports rose for the sixth consecutive month in January, with 10% year-on-year growth topping forecasts, the Ministry of Commerce said on Friday. The figure was attributed partly to a low base in 2023 and followed a rise of 4.7% in December. The Thai Chamber of Commerce expects exports to expand by 2-3% this year.
• The cabinet has approved the extension of the visa exemption for tourists from Kazakhstan for another six months, until Aug 31, as spending by the tourists from the central Asian country is high.
• The National Economic and Social Development Council (NESDC) has revised its 2024 GDP growth forecast downward to 2.7% from 3.2%, citing global uncertainties and domestic political conflicts. 2023 GDP growth was 1.9%.
• The NESDC recommends the Bank of Thailand consider using monetary measures to support the economy as fiscal measures have been exhausted, especially as household debt remains high and SMEs show signs of financial strain.
• The Electric Vehicle Board has approved incentives to promote commercial use of EVs, offering a two-fold deduction from taxable income for domestically produced e-bus and e-truck expenses with no upper limit. The deduction is 1.5 times for imports. The measures will be effective until the end of 2025.
• The Federation of Thai Industries (FTI) reported a 16.42% drop in car sales in January, with pickup sales plummeting 43.47% as bank lending conditions tightened, while EV sales jumped 238% from a low base. The FTI targets car production this year of 1.9 million units, up 3.2% from 2023.
• Credit card companies are pressing the Bank of Thailand to reduce the minimum monthly payment of 8% to 5%. Before the pandemic, the minimum was 10% but the rate was reduced to 5% as many borrowers were struggling or had lost jobs. The rate was raised back to 8% in January of this year.
• The Ministry of Finance proposed that the Bank of Thailand relax loan-to-value (LTV) lending criteria to stimulate the real estate sector. The National Housing Authority says the current LTV ratio is appropriate and any relaxation might affect financial stability.
• The Stock Exchange of Thailand is planning to raise the market capitalisation requirement for securities eligible for short selling and triple the fines for violators of short-selling rules.
• Bondholders of JKN Global Group have asked the Securities and Exchange Commission to conduct an investigation and expedite the seizure of the media and marketing company's assets after it announced the indefinite postponement of a bondholders' meeting. JKN has been struggling ever since it bought the Miss Universe pageant. It recently had to sell a 50% stake to a Mexican investor to shore up liquidity.

COMING UP: The US will release January new home sales on Monday, followed by durable goods orders and consumer confidence on Tuesday. On the same day, the Reserve Bank of New Zealand has an interest rate meeting.

• On Thursday, the UK will update housing prices and Germany will release January inflation. The US will release core personal consumption expenditure, the Fed's preferred inflation gauge, and China will release February manufacturing PMI. Friday brings euro zone inflation and US manufacturing PMI. Domestically, the Fiscal Policy Office will report the future regional economic confidence index this week.

STOCKS TO WATCH: Kiatnakin Phatra Securities recommends stocks based on five factors: current profits that are still much lower than past profits; beneficiaries from declining interest rates; stocks with low foreign holdings; stocks ranked high in valuation by the KKP scorecard; and firms benefiting from the EV investment trend.

• The brokerage recommends large and mid-cap stocks including CPALL, SCB, MINT, TOP and AWC. Recommended small-caps are WHA, OSP, PLANB, SPALI and DIF.
• Asia Plus Securities suggests stocks that could benefit from improved market confidence amid better oversight of short selling and program trading. Large stocks with modest liquidity that could benefit are AOT, INTUCH, DELTA, BJC, CPAXT, BDMS, AEONTS, MBK, SCC and OR. Stocks that have been short-sold significantly and could see a price rebound include BTS, BANPU, BTG, COM7 and RATCH.

TECHNICAL VIEW: Bualuang Securities sees support at 1,380 points and resistance at 1,430. InnovestX Securities sees support at 1,380 and resistance at 1,420.