Covid and China crackdown sap regional confidence

Recap: Emerging market shares slid 0.8% yesterday as worries about a widening regulatory crackdown in China and surges in Covid-19 cases sapped investor confidence. But European stocks hit new highs and were on track for their fourth consecutive week of gains on the prospect of more forecast-beating corporate earnings and a steady recovery from the pandemic-induced downturn.

The SET index moved in a range of 1,525.29 and 1,551.61 points this week before closing yesterday at 1,528.32, up by 0.43% from the previous week, in daily turnover averaging 83.32 billion baht for four operating days.

Institutional investors were net buyers of 2.31 billion baht, retail investors bought 809.49 million baht and brokers purchased 96.94 million baht worth of shares. Foreign investors were net sellers of 3.21 billion baht worth of shares.

Newsmakers: A $1.2-trillion infrastructure investment plan hailed as "historic" by President Joe Biden has overcome a key hurdle in the US Senate and is now headed for a House vote, bringing it closer to becoming law.

• President Biden's economic agenda took a major step forward on Wednesday with Senate passage of a $3.5-trillion budget framework, which could open the way for the biggest expansion of federal social spending in decades.
• The number of available jobs since May has outnumbered Americans looking for work. One factor is a mismatch between where people want to work and which industries are hiring.
• Investors in China remain anxious about Beijing's push to exert more control over a range of industries. In real estate, regulators have now barred equity funds from raising money to invest in residential property development.
• China's plan to expand its anti-sanctions law into Hong Kong is a fresh compliance headache for international banks already caught up in deteriorating relations between Beijing and major western powers, analysts say.
• The US Air Force is set to reopen a bidding war between Boeing and rival Airbus over the replacement of its ageing fleet of refuelling aircraft.
• China Telecom could raise more than US$8 billion in a Shanghai initial public offering that would be the biggest this year, months after it was delisted in the United States amid Washington's stand-off with Beijing.
• The Philippine economy exited a pandemic-induced recession with its fastest year-on-year growth in over three decades, but tighter Covid curbs could hamper the recovery.
• The struggling Hong Kong carrier Cathay Pacific on Wednesday reported a $972 million net loss in the first six months of 2021 as the pandemic continues to hammer demand for travel.
• The dollar is holding steady near its highest level in four months as investors see signs that the Federal Reserve could speed up the tapering of monetary stimulus amid more signs of persistent inflation.
• Oil prices are falling as the International Energy Agency has warned that demand growth had slowed sharply as surging Covid cases worldwide forced governments to revive movement restrictions, most notably in Southeast Asia.
• Gold prices are edging higher, underpinned by concerns over the rapid spread of the Delta variant, although a resilient dollar has capped gains and kept bullion on track for its second straight weekly decline.
• The cabinet on Tuesday approved a relief package worth 33.47 billion baht to help 6.69 million workers in 29 maximum-risk or dark red provinces registered under Sections 39 and 40 of the Social Security Act.
• Thailand's retail market is expected to contract by 12% this year, with a million workers likely to lose their jobs if the government fails to speed up the provision of financial aid to operators as well as offer domestic consumption stimulus, warns the Thai Retailers Association.
• The prolonged nature and long-lasting effects of the pandemic mean banks and clients should focus on long-term debt restructuring, says the Bank of Thailand.
• The lowering of deposit protection to a maximum of 1 million baht this month is unlikely to affect the confidence of the depositors on the financial institutions, said Krisada Chinavicharana, the Finance Ministry permanent secretary.
• Savings rates by local residents at Thai and foreign commercial banks have more than doubled over the course of the pandemic, new figures show.
• The overall sentiment of foreign businesses operating in Thailand has plunged, as foreign investors are growing concerned about persistently high Covid caseloads and slow vaccine allocations.
• Despite escalating Covid infections, the value of Thailand's investment applications in the first half of this year rose 158% from a year earlier to 386 billion baht, led by the electronics and medical sectors, the Board of Investment said.
• The latest travel warning from the US Centers for Disease Control and Prevention (CDC) against travel to Thailand has exacerbated the tourism outlook for the third quarter.
• More than a third of Thais will not take any vacations around the country in the final quarter even if the Covid situation improves, a Suan Dusit poll showed on Sunday.
• The residential housing market remains stagnant and will take some time to rebound due to poor homebuyer sentiment, according to Sena Development Plc.
• The oil and gas conglomerate PTT Plc is increasing its debenture issuance to 47 billion baht following huge interest from investors as part of a plan to help boost the domestic economy and create more jobs.
• Kerry Express (Thailand) is developing its own e-wallet in an effort to gain a stronger footing on online shopping platforms and in social commerce.
• Advanced Info Service (AIS), the country's biggest mobile carrier by subscriber numbers, has joined with Microsoft to launch a new programme to support local startups' growth through tech solutions.
• The Chinese smartphone maker Xiaomi climbed to top spot for the first time in the Thai market with a 21% share in the second quarter, according to the global research firm Canalys. Globally, Xiaomi is closing in on leader Samsung and has knocked Apple -- which did not even make the top five in Thailand -- into third place.
• Sri Trang Gloves Thailand Plc saw earnings grow 165% year-on-year in the second quarter to 13 billion baht with profits surging 591% to 7.28 billion baht on Covid-linked demand for medical products.

Coming up: Thailand and Japan will release second-quarter GDP data on Monday. The same day, China will release July housing prices, fixed asset investment, retail sales and industrial production.

• The US will release July retail sales and industrial production figures on Tuesday. The euro zone will release July consumer prices on Wednesday, and the US will announce July building permits.
• The US Federal Reserve will release its meeting minutes on Thursday and Australia will release July employment figures. On Friday, Japan will release July consumer prices and Canada will release June retail sales figures and new housing prices.

Stocks to watch: Capital Nomura Securities believes the baht is heading for its weakest in three years and recommends stocks that will benefit from depreciation such as agricultural and food companies. Food and agriculture exporters that will gain from a foreign-exchange rate shift of 1-3% are TU, CPF, ASIAN, NER, XO and SAPPE. Electronic parts producers with poised to gain 2-3% from the exchange rate are SVI, HANA and KCE. For industrial estate stock, the broker recommends AMATA.

UOB Kay Hian Securities recommends communication firms and REITs amid high market volatility as the market is concerned about the risk of earnings revisions that may occur in the second half of the year. The broker recommends accumulating ADVANC, DTAC, FTREIT and WHART. It recommends TVO, TU, CPF, GFPT and TWPC for food and agriculture stocks and SCGP and BGC in the packaging group.

Technical view: DBS Vickers Securities sees support at 1,500 points and resistance at 1,560. UOB Kay Hian sees support 1,515 points and resistance at 1,590.