Asian shares rally as Trump softens tone on China

RECAP: Asian shares rallied yesterday after US President Donald Trump said he thought he could reach a trade deal rather than impose tariffs on China.

The SET index moved in a range of 1,338.29 and 1,363.92 points this week, before closing yesterday at 1,354.07, up 1% from the previous week, with daily turnover averaging only 33.21 billion baht.

Retail investors were net buyers of 1.75 billion baht, followed by institutional investors at 1.14 billion. Foreign investors were net sellers of 2.07 billion baht, followed by brokerage firms at 819.57 million.

NEWSMAKERS: President Donald Trump used a virtual address to the World Economic Forum to call for immediate interest rate cuts around the globe, and told Opec to increase production to lower oil prices and inflation.

• Mr Trump said he would "rather not" have to impose tariffs on China, after a "friendly" conversation with Xi Jinping gave him hope that a trade deal was possible. The remarks came days after he threatened 10% tariffs on all Chinese goods starting on Feb 1.
• The president announced a $500-billion investment in AI infrastructure in the US. The venture dubbed Stargate will be led by the Japanese investor SoftBank, cloud giant Oracle and the ChatGPT maker OpenAI.
• Mr Trump threatened 25% import tariffs on Mexico and Canada starting from Feb 1. He also downplayed the security risk posed by TikTok, days after offering the social video app a reprieve from legislation that would have forced it to shut down.
• The Bank of Japan raised interest rates yesterday to a 17-year high of 0.5% after core inflation accelerated to 3% in December. The yen strengthened to 155.3 to the dollar on the news and Japanese government bond yields rose to 16-year highs.
• Indonesia will require natural resource exporters to keep all proceeds onshore for at least one year as part of an effort to shore up the rupiah, which is trading near lows not seen since the Asian crisis in 1998.
• China's luxury market declined by 18-20% in 2024, marking the end of a period of "exponential growth", with sales expected to remain flat this year, Bain and Co said in its latest China Luxury Report.
• The People's Bank of China held its one-year loan prime rate at 3.1% and the 5-year prime rate at 3.6%, as a weakening yuan has limited monetary policy easing efforts.
• China's securities regulatory has ordered funds to increase their stock holdings to support the market. Mutual funds must increase equity holdings by at least 10% in three years. Large insurers must invest 30% of total premiums in stocks.
• Japan saw record-high exports last year, with shipments reaching 107.9 trillion yen ($34 billion), the Finance Ministry said.
• The EU has postponed for 12 months the enforcement of measures requiring deforestation-free products, giving large companies until Dec 30, 2025, and smaller ones until June 30, 2026, to prepare. The measures have been called discriminatory by major palm oil producers Indonesia and Malaysia.
• Google is preparing to invest over $1 billion in the AI startup Anthropic, reflecting intense competition among AI developers and key rivals like OpenAI, the Financial Times reported.
• Mitsubishi Motors won't be a part of a merged Honda-Nissan holding company, the Yomiuri reported. Nissan has also abandoned plans to produce a compact EV at its plant in the southern US state of Mississippi, part of its restructuring efforts.
• The Chinese EV giant BYD has beaten out Toyota to take the title of most popular car brand in Singapore for the first time. Its sales more than quadrupled last year to 6,191 cars, versus 5,736 sold by Toyota.
• Netflix shares soared to a record high on Wednesday after the streaming giant reported its biggest quarterly subscriber gain in history. The company added 18.9 million customers in the fourth quarter, more than double the expectation, bringing global subscribers past 300 million.
• Malaysia's central bank on Wednesday kept its overnight policy rate at 3%, as economic growth remains strong and inflation stays under control.
• Russia has joined China and India in promoting its interests in war-ravaged Myanmar, in particular the possibility of investing in the moribund Dawei Special Economic Zone (SEZ) in which Thailand used to be a major player, the independent news site The Irrawaddy reported.
• Thailand's banking industry reported softer net profit growth of 7.2% in 2024, down from the double-digit levels of recent years, reflecting domestic economic conditions. The performance was supported by a reduction in loan-loss reserves and controlled NPLs. The 11 SET-listed banks reported consolidated net profit of 253 billion baht.
• The SET-listed developer Land & Houses (LH) will launch just four new projects worth 11.1 billion baht, the lowest in more than two decades, due to the ongoing economic slowdown and ample existing inventory.
• Switzerland and the three other European Free Trade Association (Efta) states -- Iceland, Liechtenstein and Norway -- signed a free trade agreement with Thailand on the sidelines of the Davos World Economic Forum on Thursday.
• Thailand's exports grew by 5.4% to reach a record-high $301 billion in 2024, the Ministry of Commerce said. Imports rose 6.3% to $307 billion, resulting in a trade deficit of $6.28 billion. It expects 2025 exports to grow 2-3%.
• The Finance Ministry is proposing a new battery tax structure to the cabinet next month, shifting from a single rate to a tiered system. The goal is to promote clean, rechargeable, high-efficiency batteries at a lower price.
• Energy regulators and the three electricity agencies introduced a green tariff of 4.21 baht a unit, 6 satang higher than the general rate of 4.15 baht, as an option for businesses using renewable power.
• The cabinet approved a draft regulation to impose a carbon tax of 200 baht per tonne of carbon equivalent. The tax will not affect motorists as the change involves an internal restructuring of fuel levies.
• The Industrial Confidence Index declined to 90.1 in December, from 91.4 in November, due to slowing production, fewer working days in December, floods and unstable weather conditions in the South.
• The Tourism Authority of Thailand (TAT) disagrees with a proposal to end visa-free entry for Chinese tourists in response to concerns about criminal activity. Executives suggest reducing the visa-free stay period from 60 days to 10-15 days as an alternative.
• The TAT targets 3 trillion baht in tourism revenue this year, with 2 trillion from 39-40 million foreign arrivals and 1 trillion from 200-220 million domestic trips. It expects 1.35 million foreign tourists during Chinese New Year, up 5% from last year.
• The Commerce Ministry says 29 Thai product groups risk facing US tariff measures, with the US monitoring countries where Chinese investors set up production bases to circumvent trade restrictions.
• The National Economic and Social Development Council urged the government to create mechanisms to protect Thailand against US trade restrictions, after noting high investment applications from Chinese companies via Singapore, which may face increased scrutiny.
• Thai businesses are expected to incur up to 1 billion baht in losses from China's ban on sugar syrup and premixed powder exports, with shipments left stranded in Chinese ports, industry groups say.

COMING UP: The US will report new home sales on Monday and durable goods orders on Tuesday. Also Tuesday, the Bank of Japan releases core inflation. The US Federal Reserve and the Bank of Canada will announce interest rate decisions on Wednesday, followed by the European Central Bank on Thursday. On Thursday Germany, the euro zone and the US will release GDP figures. Stock markets in Singapore, Hong Kong, China and South Korea will close on Thursday for Chinese New Year.

• Locally, Dhipaya Group Holdings will announce a partnership with SET-listed BERYL 8 Plus (BE8). On Tuesday, SCG Packaging has a briefing, followed by a Siam Cement briefing on Thursday.

STOCKS TO WATCH: Maybank Securities (Thailand) recommends stocks expected to report good Q4 2024 earnings growth and to continue doing well in 2025, while prices have fallen in line with the market. Four examples are BBIK, BCP, CPALL and MTC.

• Asia Plus Securities said stocks in many industries could benefit from the government's financial hub policy, including industrial estate and tech stocks, such as AMATA, WHA, AIT and INSET. Tourism and office rental operators could benefit, such as CENTEL, MINT, ERW and AWC. Also recommended are financial stocks KTB, BBL, KBANK and TISCO; and consumer stocks CPALL, DOHOME, BJC, CBG, MTC and SAWAD.

TECHNICAL VIEW: InnovestX Securities sees support 1,325 points and resistance at 1,370. Kasikorn Securities sees support at 1,340 and resistance at 1,370.