Good week for stocks as concerns EASE about fed

Published: 23/11/2015 at 04:30 AM

Newspaper section: Business

Recap: The deadly attacks in Paris and minutes of the October Federal Reserve meeting, which appeared to point to a December interest-rate increase, rattled global stock markets early last week. However, investors went on a buying spree later as they took a deeper look at the Fed minutes and concluded any action would be gradual. Better-than-expected GDP data for Thailand in the third quarter also lent some support to Thai shares.

The SET Index last week moved in a range between 1,374.97 and 1.398.19 points and closed on Friday at 1,393.84, up 0.8% from the previous week, in moderate trade averaging 35.37 billion baht a day.

Foreign investors were net sellers of 4.66 billion baht, brokers sold 393.96 million and retail investors 1.84 billion. Institutional investors bought 6.90 billion baht more than they sold.

Big movers: Thanapiriya (TNP) edged up 2.86% above its 1.75-baht IPO price on its first day of trade on the MAI on Wednesday. It finished at 1.62 baht on Friday. SPORT was the week’s gainer, adding 44.4% to 2.34 baht. Top loser TPA fell 25.6% to 8.70 baht. JAS, off 1% to 5.15 baht, led in both volume and turnover. It was followed in turnover by PTT, falling 0.4% to 255 baht, and KBANK, down 2.9% to 170 baht.

Newsmakers: The Fed minutes reinforced expectations that the benchmark rate will rise at the Dec 15-16 policy meeting, but that the pace of increases will be gradual. The minutes showed policymakers were not as concerned about slower global growth and market volatility as they had been earlier.

The Japanese economy slipped back into recession into the third quarter, with GDP contracting 0.8% year-on-year after a revised 0.7% fall in the second quarter. However, the Bank of Japan believes recovery is imminent and the trend of rising prices remains on course, as it attributes the current weak inflation to low oil prices.

Japan posted a goods trade surplus of 111.47 billion yen (US$903 million) in October, its first in seven months, despite the first drop in exports in 14 months. Lower oil and LNG imports pushed overall import value down by 13.4% year-on-year while exports fell 2.1%.

Indonesia’s central bank left its interest rate unchanged at 7.5%, providing some support to the economy while guarding against currency weakening. Bank Indonesia also lowered the reserve requirement for banks to 7.5% from 8%, effective Dec 1.

The National Economic and Social Development Board forecast the economy would grow 2.9% this year, improving from 0.9% last year, as government stimulus measures and strong tourism growth offset declines in exports and agricultural production. It forecast a 5% drop in export value, a 2% rise in private consumption and 4.6% growth in investment. Third-quarter GDP expanded 2.9% year-on-year, compared with 2.8% in the second quarter and 3% in the first. It foresees growth of 3-4% next year.

Deputy Prime Minister Somkid Jatusripitak remains hopeful that GDP growth this year will top 3% due to multiplier effects from government stimulus programmes.

The cabinet will soon consider a new 100-billion Thailand Future Fund for infrastructure. To make it attractive, the government plans to provide a minimum return guarantee to holders, Finance Minister Apisak Tantivorawong said. The fund is expected to list on the SET by year-end.

The government has identified 10 targeted industries for more investment promotion. They are next-generation cars; smart electronics; affluent, medical and wellness tourism; agriculture and biotechnology; food; robotics for industry; logistics and aviation; biofuels and biochemicals; digital; and medical. The Finance Ministry said serious promotion of the 10 industries could help lead to GDP growth of 5-6% a year.

Bank of Ayudhya forecasts the baht will be more volatile next year in anticipation of increasing capital mobility after the US raises interest rates. The baht volatility rate is expected to increase to 7-8% next year from 6.15% this year.

Kasikornbank expects its gross non-performing loan (NPL) ratio to peak at 3.5% to 3.6% next year, largely due to bad debt at small and medium-sized enterprises. It has raised its gross NPL forecast for this year to 2.8% of credit outstanding from 2.6% previously. NPLs rose to 2.62% totalling 1.58 trillion baht at the end of September from 2.4% in June and 2.2% in December 2014.

Total Access Communication Plc (DTAC) is rushing to conclude negotiations with its concession owner CAT Telecom to upgrade its unused bandwidth on the existing 1800-megahertz spectrum to provide 4G service. The move comes after the second-ranked mobile operator lost out to rivals AIS and TrueMove in the recent 4G auction. DTAC wants to use 20 MHz of unused bandwidth on the 1800-MHz spectrum to provide 4G service under the 2G mobile concession terms.

Sino-Thai Engineering and Construction Plc (STEC) and Right Tunnelling Co won electronic auctions to build the first double-track rail route from Chachoengsao to Saraburi for the State Railway of Thailand (SRT). STEC beat five other contenders for the first contract with a bid of 9.8 billion baht, 1% lower than the reserve price. Right Tunnelling beat out three other bidders, offering 407 million baht, 32% lower than the reserve price of 598.6 million.

PTT Exploration and Production Plc (PTTEP) has made further expenditure cuts in a bid to reduce production costs to below $40 a barrel. This is slightly below the previous average production cost of $42.22 set early this year, down from $43.60 last year.

Coming up this week: Thailand’s trade data for October and the Markit composite PMI for the euro zone are due today.

The United States will release revised third-quarter GDP figures tomorrow. Economists expect an upward revision from the preliminary reading of 1.5%, further strengthening the case for a Fed rate increase.

The Philippines will release Q3 GDP on Thursday. US financial markets are closed for the Thanksgiving Day holiday.

Thailand’s manufacturing production index for October, Japanese inflation and euro zone economic confidence will be announced on Friday.

Stocks to watch: Stocks to be added to the MSCI Small Cap index, effective from Nov 30, are GPSC, IMPACT, PLAT,TIPCO and VNG. Tisco Securities has buy recommendations for BJCHI, CPALL, INTUCH, JAS, QH, SAWAD, SF and SPA. Thanachart Securities recommends CK, ITD, UNIQ, TPIPL, CPALL, AOT, BTS and EGCO.

Technical view: KT Zmico Securities tips support at 1,350 with the immediate resistance at 1,400. Bualuang Securities puts support at 1,370 and resistance at 1,400 points.