Shares dip amid rate uncertainty, high oil prices

RECAP: Shares in Asia declined yesterday, tracking US stocks as interest rate uncertainty, high oil prices and geopolitical tensions weighed on sentiment.

The SET Index moved in a range of 1,367.59 and 1,384.32 points this week before closing yesterday at 1,375.58, down 0.2% from the previous week, with daily turnover averaging 30.72 billion baht.

Retail investors were net buyers of 2.1 billion baht, followed by foreign investors at 576.56 million and brokerage firms at 504.58 million. Institutional investors were net sellers of 3.18 billion baht.

NEWSMAKERS: US equities lost strength on Thursday after Minneapolis Fed president Neel Kashkari said it was possible the central bank would not cut interest rates this year if inflation stalls. Federal Reserve chairman Jerome Powell also said there was no rush to cut rates in view of strong US economic growth and higher than expected inflation.

• US manufacturing activity picked up in March, with the ISM purchasing managers' index (PMI) rising to 50.3, the highest since September, suggesting businesses have adapted to higher rates. Services activity expansion slowed, with the PMI easing to 51.4 from 52.6.
• The number of job openings in the US rose to 8.75 million in February, higher than forecasts. This suggests the economy and labour market remain robust but raises concerns the Fed may delay plans to cut interest rates.
• The US trade deficit widened 1.9% in February to $68.9 billion, the third straight month of growth in the trade imbalance.
• US crude oil production in January declined 6% from the record high set in December, to 12.5 million barrels per day, amid cold weather conditions, the Energy Information Administration said.
• Gold traders have increased their forecasts for global and domestic prices to $2,350 per ounce and 40,500 baht per baht-weight, as prices keep rising on sustained demand from central banks and heightened geopolitical conflict.
• Oil prices extended gains yesterday, supported by geopolitical tensions and concerns over tightening supply. Brent crude climbed to $91.24 a barrel, the highest since October.
• The Opec+ alliance has agreed to maintain voluntary production cuts of 2.2 million bpd, with Saudi Arabia voluntarily reducing output by 1 million bpd to support global prices.
• Euro zone inflation eased to 2.4% March from 2.6% in February, amid a slowdown in food prices, potentially keeping interest-rate cuts by midyear on the table.
• Japanese Prime Minister Fumio Kishida is expected to reach an agreement next week with US President Joe Biden on new rules for subsidies aimed at avoiding dependence on imports of low-priced key products such as microchips and batteries, the Nikkei business daily said.
• President Biden has amended various criteria with the goal of making it increasingly difficult for China to access AI chips and chip manufacturing tools from the US as part of its efforts to restrict China's chipmaking industry.
• Bank Indonesia intervened in the currency market to steady the rupiah after it fell to a four-year low of 15,963 per dollar on Tuesday amid a broad dollar rebound and heavy bond outflows.
• Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract chip manufacturer, resumed work on Thursday after a major earthquake on Wednesday. It said initial inspections showed safety systems at its Taiwan-based chip fabs were operating normally.
• BYD, China's biggest electric vehicle maker, reported first-quarter 2024 sales fell 43% compared to the fourth quarter of 2023. But rival Tesla, which BYD overtook for the global lead late last year, also posted an 8.5% decline in quarterly deliveries, the first drop in four years.
• Shares of Xiaomi surged as the Chinese electronics maker's sub-$30,000 EV drew strong interest, though a brokerage forecast the firm would lose nearly $10,000 per car because of steep discounting.
• The Chinese automaker Chery and a Vietnamese firm have signed a joint-venture agreement to build an $800-million automobile plant, the first EV factory in Vietnam, in the northern province of Thai Binh.
• UBS announced a US$2-billion share buyback programme, with $1 billion expected to be purchased this year after the expected completion of its merger with Credit Suisse in the second quarter.
• The price of Bitcoin fluctuated before dropping to $67,500 yesterday amid profit-taking ahead of a "halving" event later this month that will reduce supply.
• Thailand's headline consumer price index (CPI) in March fell 0.47% from a year earlier, the sixth straight month of declines. The Bank of Thailand forecasts that headline inflation will average between 0.7% and 1.2% for the full year.
• The World Bank has cut its 2024 GDP forecast for Thailand to 2.8% from 3.2%, citing external trade and geopolitical factors, as well as internal factors such as the delayed budget.
• Chinese and Russians topped the list of foreign buyers of condominiums in Thailand last year, with visa waivers and geopolitical conflict driving demand above pre-Covid levels, according to the Real Estate Information Center (REIC).
• The Thai Bond Market Association (ThaiBMA) said corporate bond issuance in the first quarter dipped slightly to 270 billion baht, due to high interest rates. Large businesses tapped other funding channels and were concerned about defaults. The association forecasts full-year issuance of around 1 trillion baht, as rates may decline in the second half.
• The Thai Auto Industry Association forecasts 2024 car production of 1.9 million units, up 3.2% year-on-year, of which 750,000 units are for domestic sales and 1.15 million for export, driven by strong demand from abroad, especially the Middle East and Australia.
• Microsoft CEO Satya Nadella will visit Thailand on May 1 and hold discussions with the Prime Minister Srettha Thavisin about investing over 100 billion baht in data centres, cloud computing and artificial intelligence.
• The Board of Investment is preparing to meet with leading electric vehicle (EV) battery cell manufacturers in China to encourage them to invest in Thailand.
• The cabinet has approved a plan to increase the fiscal 2025 budget deficit by 153 billion baht, a move aimed at stimulating an economy still lagging its peers in the region. The revision would bring the total budget to 3.752 trillion baht, up from 3.6 trillion previously planned.
• The cabinet approved an increase in the minimum wage to 400 baht a day for 10 tourism provinces, effective from April 13. It also raised the ceiling for monthly pensions to 11,000 baht per month.
• The Tourism Authority of Thailand reported more than 9 million foreign arrivals in the first quarter, and expects to exceed its 2024 target of 35 million.
• The government is poised to impose a 7% value-added tax (VAT) on all imported goods valued from one baht up, starting in May. Goods sold for less than 1,500 baht per parcel and imported to Thailand are currently exempt from VAT but local small businesses have complained that the country is being swamped by cheap goods from abroad.

COMING UP: The Reserve Bank of New Zealand will hold a rate meeting on Tuesday. On Wednesday the US and China will report March inflation and the Fed will release minutes of its last meeting.

• On Thursday, China will update lending data, the European Central Bank will hold a rate meeting, the Bank of England will report on credit conditions, and the US will report initial jobless claims and producer prices. Friday brings UK GDP, German consumer inflation, and US and Chinese trade figures.
• Locally, the Bank of Thailand's Monetary Policy Committee will meet on Wednesday. The Stock Exchange will hold a news conference about March trading figures.

STOCKS TO WATCH: Asia Plus Securities suggests accumulating shares when prices decline in companies benefiting from any or all of three factors: a weak baht, China's recovery and oil price increases.

• The baht has shed 6.8% since January. Export-oriented stocks are still laggards and the broker's picks are KCE (-27% year to date), HANA (-25%), CPF (-7.6 %), TU (-2%) and CENTEL (-0.6%).
• The Chinese and Hong Kong stock markets have turned positive but Thai stocks based on the Chinese economy still lag. Suggested stocks are SCGP (-17% YTD), SCC (-15.4%), IVL (-8.3%) and, CENTEL (-0.6%).
• Oil prices are approaching $90 per barrel, the highest in 6 months. Stock picks are PTT (-4.9% YTD), IRPC (-4.5%), PTTEP (3.7%), BCP (3.4%), SPRC (7.3%), TOP (9.8%).
• Kasikorn Securities has a positive view of commerce stocks, as it believes the retail sector will be the main beneficiary of the tourism recovery. It recommends selective buys of CPALL, CRC and GLOBAL.

TECHNICAL VIEW: Trinity Securities sees support at 1,350 points and resistance at 1,410. InnovestX Securities sees support at 1,360 and resistance at 1,390.