RECAP: Most Asian equities extended their rallies yesterday, while currencies held onto recent gains amid a bout of Fed-fuelled optimism, after the US central bank flagged likely rate cuts next year.
Thai shares moved in a range of 1,354.73 and 1,398.65 points this week, before closing yesterday at 1,391.03, up 0.7% from the week before, with daily turnover averaging 49.6 billion baht.
Foreign investors were net buyers of 2.17 billion baht, followed by institutional investors at 282.40 million. Retail investors were net sellers of 1.78 billion baht, followed by brokers at 674.37 million.
NEWSMAKERS: The US Federal Reserve left interest rates unchanged this week and signalled three cuts totalling 75 basis points next year, expressing confidence that it has contained inflation without a recession or significant cost to employment.
Wall Street brokerages have brought forward their expectations for the Fed’s first rate cut, with Goldman Sachs now seeing a March start to the easing cycle.The European Central Bank left its benchmark interest rate unchanged at a record high of 4% on Thursday but warned inflation could pick up again, in an apparent pushback against market hopes of early rate cuts in 2024.The Bank of England kept interest rates at a 15-year high of 5.25%, sticking with its message that rates will remain high for some time as inflation is still more than double the 2% target.US consumer inflation edged down in November to 3.1% year-on-year from 3.2% in October. Retail sales grew by 4.1% year-on-year. Initial unemployment claims fell to a two-month low of 202,000, and the unemployment rate fell to 3.7%.The Asian Development Bank on Wednesday revised upward its 2023 growth forecast for developing economies in Asia Pacific to 4.9%, from 4.7% in September, citing improvements in China and India. The forecast for next year remains at 4.8%.Representatives from over 200 countries reached a consensus at the COP28 climate talks in Dubai on “transitioning” from fossil fuel and coal-based energy to renewable, nuclear and carbon-capture energy sources. They anticipate a peak in pollution emissions in 2025.Oil prices rallied from six-month lows thanks to a weaker dollar and a bullish forecast for 2024 oil demand from the International Energy Agency (IEA). Recent declines had been driven by concerns over a potential oversupply in the world market and slowing demand.US Treasury Secretary Janet Yellen on Thursday called on China to shift from a state-driven approach to economic policy. “Too strong a role for state-owned enterprises can choke growth, and an excessive role for the security apparatus can dissuade investment,” she told a US-China Business Council meeting.Chinese consumer prices contracted by 0.5% year-on-year in November, the steepest decline in three years. Producer prices fell 3%, declining for the 14th consecutive month, indicating severe deflation and potential impact on the economy.China’s economy will slow next year, with annual growth falling to 4.5% from 5.2% this year despite a recent recovery spurred by investments in factories and construction and in demand for services, the World Bank said on Thursday. Growth is expected to slow further in 2025.The embattled Chinese developer Country Garden took steps to prevent its debt crisis from worsening, paying off a yuan note ahead of schedule and selling a stake in a shopping-mall operator.Machinery orders in Japan rose unexpectedly in October, climbing for a second straight month by 0.7%. The orders, a leading indicator of capital spending in the next 6-9 months, are still down year-on-year amid uncertainty about the global economy.Japan has risen three places to second in Asia Pacific for corporate governance, as Australia remained in first place, while Singapore, Taiwan and Malaysia rounded out the top five, according to the Asian Corporate Governance Association (ACGA).The Japanese manufacturers’ sentiment index for the coming three months has improved to 12.0 from the previous reading of 9.0, and better than the market expectation of 10.0.The Japanese government is planning to offer tax incentives for a decade to boost mass production in five areas including electric vehicle (EV) production and semiconductor manufacturing.The French automaker Renault is selling a 5% stake in partner Nissan. The move follows the finalisation of a plan for Renault to reduce its interest in Nissan. Ultimately the two carmakers aim to equalise their cross-shareholdings at 15%.The World Bank cut Thailand’s economic growth forecast to 2.5% this year from 3.4% predicted in October, due to contractions in exports and ongoing fiscal consolidation. The forecast for 2024 was also revised down to 3.2% from 3.5%.The Ministry of Labour will reconsider minimum wage rates after Prime Minister Srettha Thavisin complained that the 2.4% average increase approved by the national wage committee was too low. The revised rates are expected to go to the cabinet by Dec 25 and to take effect on Jan 1.Prime Minister Srettha is spending the weekend in Japan where he will seek to attract investments in five key industries and the southern land bridge project.The Ministry of Finance has instructed the Securities and Exchange Commission to consider banning program trading if it is found to have a negative effect on the stock market negatively. Before its recent rally, the SET was poised to fall into bear-market territory, having fallen 20% from its February 2022 high.The Chinese EV maker Changan Automobile plans to start producing sport utility vehicles from its Rayong factory in the first quarter of 2025.Chatchaval Jiaravanon, part of the billionaire family that owns the Charoen Pokphand Group, is leading a group of investors in CMAG Funds, a new investment pool targeting high-end properties in the region, with plans to raise as much as $100 million.The Bank of Thailand forecasts GDP will grow by 3.2% next year, a modest recovery from this year. It says the Thai economy is facing low growth potential and risks falling into a trap as consumption-led stimulus cannot cover up for a lack of structural reforms.Thailand has announced plans to increase the share of renewable energy to 50% from 28% within five years. Talks are under way with Laos to purchase all its electricity output, shifting from the current arrangement where electricity is transmitted through Thailand to Singapore.The Federation of Thai Industries said the industrial confidence index for November rose to 90.9, from 88.4 in October, the first rise in five months, on improvements in tourism and a lower cost of living.The Thai National Shippers Council expects a contraction in exports this year of 1% to 1.5% amid a global economic slowdown, prolonged wars and high interest rates. However, it expects a return to growth of 1-2% next year.Prime Minister Srettha has announced a comprehensive debt management plan for debts totalling 16 trillion baht, placing some 10.3 million debtors into four groups. Chronic debt in 3 million accounts will be transferred to asset management companies (AMCs).The Tourism Authority of Thailand aims to increase international market revenue by another 500 billion baht next year, aiming for total revenue of 3.5 trillion baht. Proposals include extending visa-free entry and expanding markets to increase stay durations and spending. The target for Chinese tourists is set at 8.5 million.Vehicle bookings at the Thailand International Motor Expo were up by 45% from a year ago to a 10-year high, with Chinese EV manufacturers drawing strong interest. Total bookings at the 12-day event were 53,248, compared with 36,679 in 2022.
COMING UP: The US will release the December housing index on Monday. On Tuesday, the Bank of Japan holds a policy meeting and the US reports new home construction figures for November. On Wednesday, China’s central bank announces its benchmark loan rate of December. Locally, the Fiscal Policy Office will report local and regional economic indicators during the final two weeks of December.
STOCKS TO WATCH: InnovestX Securities recommends big-cap stocks in the SET50 that are expected to be the target of ThaiESG funds. Top picks are SCGP, OR, CPALL, BEM, GULF, CRC and HMPRO.
The brokerage also recommends big-cap stocks in the SET50 with AAA ratings in the SETESG and outperforming the market, with strong profits and dividend yields greater than 5%, namely PTT and KTB.For investors looking for long-term dollar-cost-averaging stocks that are undervalued, the brokerage recommends BBL, BDMS, BEM, CPALL, PTT and SCC.In the short term, it recommends being cautious about stocks of firms expected to be affected by a higher minimum wage. They are courier services (KEX), food (CPF, ZEN, GFPT and TU), real estate (LPN and PSH) and electronic components (HANA).Asia Plus Securities recommends stocks that benefit from the strengthening baht, including GULF, BGRIM, MINT, PTT, PTTEP, PTTGC and AAV. It also likes stocks that focus on imports, namely TFG and TVO. The last group are stocks benefiting from foreign inflows, such as KBANK, SCB, BBL, TISCO, PTT, PTTEP, PTTGC, OR, IVL, SCC, CPN, CPALL, CRC and ADVANC.
TECHNICAL VIEW: InnovestX Securities sees support at 1,360 points and resistance at 1,400. UOB Kay Hian Securities sees support at 1,366 and resistance at 1,400 points.