Recap: The near-certainty of a US Federal Reserve interest-rate increase this week prompted capital flight across Asia last week. With the US dollar strengthening, gold briefly fell below $1,200 an ounce in its worst week in four months, and oil also suffered a sharp sell-off.
The rout in oil prices depressed large-cap energy stocks and rattled the Thai stock market. Also hurting sentiment was the lingering sell-off in Group Lease (GL) shares after its auditor raised questions about lending to subsidiaries for onward lending to Cambodian dealers.
The SET index moved in a tight range of 1,534.80 and 1,564.89 points and closed at 1,539.91, down 1.7% from the previous week, in moderate turnover averaging 43 billion baht a day. Institutional investors were net buyers of 3.29 billion baht, brokers bought 69.7 million and retail investors 3.71 billion. Foreign investors were net sellers of 7.08 billion.
Big movers: U led in volume, steady at 0.03 baht. Leading in turnover were GL -- also the top loser -- sliding 52.1% to 25.25 baht; PTT, off 1.5% to 390 baht; and ADVANC, flat at 169.50 baht. Top gainer EE surged 15.3% to 1.36 baht.
Newsmakers: US employers added a healthy 235,000 jobs in February, notably in construction and manufacturing, and unemployment fell to 4.7%, all but assuring that the Fed will lift rates this week.
Chinese producer prices jumped 7.8% year-on-year in February, the biggest rise in nearly nine years, compared with a 6.9% increase in January.
China's imports surged almost 40% last month, fuelled by higher commodity prices and strong domestic demand, bolstering hopes that the economy is getting back on track. The high imports coupled with a small dip in export value resulted in a trade deficit of $9.15 billion, the first in three years.
China's foreign-currency reserves unexpectedly halted a seven-month losing streak, rising in February amid tighter controls on capital outflows and a rally in the yuan. Reserves increased by $6.9 billion to $3.005 trillion.
Japan's economy grew at 1.2% year-on-year, more than estimated earlier, in the fourth quarter of 2016 as capital expenditure grew at its fastest in almost three years.
The European Central Bank reported signs of an improving euro-zone economy, but said it would keep supplying cheap money for fear of undermining the recovery.
♦Thailand's outlook is brighter, underpinned by a strong recovery in exports amid a pickup in the global economy and higher farm income, says CLSA Securities Thailand. It forecast GDP will expand by 4% this year.
Consumer confidence rose for a third straight month in February to a 14-month high, driven by improving exports, higher crop prices and growing tourism. The University of the Thai Chamber of Commerce (UTCC) said its consumer confidence index rose to 75.8 points from 74.5 in January and 73.7 in December.
GL chairman Mitsuji Konoshita rushed to soothe market jitters, saying the finance company had to lend through subsidiaries in Singapore and Cyprus to re-lend money to about 100 Cambodian motorcycle dealers who are GL Finance customers but still lack tax-payment records. He also ensured that collateral pledged for the loans was enough to cover them in the worst-case scenario that the debts turned bad.
PTT Exploration and Production Plc has agreed to a 50-50 partnership with Total E&P Myanmar in the MD-7 exploration block in Myanmar, while PTTEP remains the operator of the project.
Siam Cement Group (SCC) has invested 5.5 billion baht to acquire a 100% stake in Vietnam Construction Materials JSC (VCM), an integrated cement operator based in central Vietnam. The enterprise value of the transaction is US$440 million, or around 15.4 billion baht, including net debt and additional efficiency improvement investments.
Bangchak Petroleum Plc (BCP) aims to more than double earnings before interest, tax, depreciation and amortisation (EBITDA) generated from biofuels and natural resource businesses to 1 billion baht each in the next two years. The aim is to balance its revenue structure and mitigate risks after the recent decline in oil prices.
Home Product Center Plc (HMPRO) is considering expanding to neighbouring countries with a total investment budget of 6-7 billion baht, says Rakpong Aroonwatdhana, head of investor relations. The new investment will include 2-3 billion baht from its own cash flow and the rest from loans. HomePro operates two branches in Malaysia, where it plans to open two or three branches in the near future. It is also exploring Cambodia, Laos, Myanmar and Vietnam.
Nok Air is embarking on a business recovery plan, but the struggling budget airline's boss says returning t profitability will take some time. The company recorded a net loss of 3.28 billion baht for 2016, up from 1.66 billion in the previous year.
Thai Wah Plc (TWPC), Thailand's top maker of tapioca and vermicelli products, plans to invest 1-2 billion baht from 2017-19 to expand across Indochina.
Sena Development plans to launch 10 new residential projects worth a combined 12 billion baht in 2017, two of which are joint-venture condos with the Japanese firm Hankyu Realty Co.
SET-listed companies in 2016 reported a five-year high in net profits totalling 909 billion baht. The strong performance reflected lower production costs and a recovery in energy, utilities and chemicals. Aggregate earnings were compiled from 567 firms, or 96.1% of total of 590, including property funds, real estate investment trusts and infrastructure funds, and excluding non-compliant and non-performing groups, as of Dec 31, 2016.
Coming up this week: Chinese retail sales and industrial production data will be announced tomorrow, as will the euro zone ZEW business expectations survey for March.
The Fed holds a two-day meeting starting tomorrow with an announcement due around 2am Thursday Thailand time. The market expects the benchmark rate will be lifted by a quarter percentage point.
♦US retail sales and inflation for February will be released on Wednesday.
♦All eyes will be on the Netherlands election on Wednesday, with the populist and anti-immigration Party for Freedom expected to do well, further hurting sentiment toward the EU.
♦The Bank of Japan meets on Thursday. Due the same day are US housing starts and euro zone inflation.
Stocks to watch: Tisco Securities recommends stocks that have potential to be added to FTSE indices from March 17. Candidates for the big-cap index are BJC and IVL, and those in the small-cap index are TLGF,TKN, TFG and BEAUTY. It also recommends stocks that will benefit from the weaker baht -- HANA, MALEE, SAPPE and VNG, and beneficiaries of government investment such as CK, STEC, UNIQ and SEAFCO.
Thanachart Securities recommends accumulating banks in anticipation that they will benefit from a US rate increase. Recommended are KBANK, KTB and TMB. The broker also recommends mid-sized banks such as KKP with healthy net interest margins and high dividend yields. It also expects SCC and PTTGC will post solid Q1 earnings.
Technical View: DBS Vickers sees support at 1,500 and resistance at 1,570 points. RHB Retail Research tips near-term support at 1,530 and then 1,500, with resistance at 1,560 and 1,575.
