Recap: The Greek debt drama and the precipitous decline in China’s stock markets shook global equities early last week. The sell-off in China sparked demand for safe-haven assets including the US dollar, roiled the Thai market and sank the baht to below 34 to the dollar, the lowest in six years. However, the rebound in Chinese shares after government efforts to restore investor confidence calmed markets, as did the Greek government’s latest concessions to creditors.
The SET Index traded in a narrow range of 1,461.57 and 1,486.29 points and closed at 1,484.90, down 0.3% from the preceding week, in turnover averaging 35.71 billion baht a day. Foreign investors were net sellers of 10.82 billion baht and brokers sold 952.43 million. Institutional investors were net buyers of 6.54 billion baht and retail investors bought 5.23 billion.
Big movers: HPT was the top loser, sliding 18% to 2.46 baht. Top gainer IEC added 25% to 0.05 baht. Leading in volume was POLAR, dipping 5% to 0.19 baht. The top three in turnover were PTT, down 3.7% to 341 baht; KBANK, rising 3.9% to 187 baht; and TASCO, off 0.4% to 23.60 baht.
Newsmakers: Chinese government agencies swung into action to arrest the 30% slide in the country’s main stock indices over the previous three weeks. Measures included a temporary trading halt on 1,331 shares, a reduction in IPOs and a $19-billion fund to purchase shares. Finally, it secured agreement from major shareholders not to sell shares for six months.
The International Monetary Fund cut its forecast for global economic growth to 3.3% from 3.5% earlier this year to take into account the impact of recent weakness in the US, along with risk from China and Greece. It left its forecast for growth next year unchanged at 3.8%. The IMF cut its forecast for the US to 2.5% this year from 3.1%, and Japan to 0.8% from 1%.
The Greek government offered to meet most of its creditors’ demands in exchange for a bailout of 53.5 billion euros, even after its citizens voted “No” to further austerity. Greece’s proposal includes sales tax increases and cuts in public spending and pensions.
Malaysia’s central bank held its policy rate at 3.25%, while the country and its markets were rocked by corruption allegations against Prime Minister Najib Razak.
Finance Minister Sommai Phasee said China’s stock market correction worried him more than the crisis in Greece, given Thailand’s heavy exposure to China, which consumes nearly 13% of the country’s exports.
The Thailand Development Research Institute (TDRI) predicted the economy would remain in the doldrums this year, with growth between 2.75% and 3.25%. It urged the government to speed up investment and take steps to help low-income earners and restore investor confidence.
The Finance Ministry intends to run a bigger budget deficit of 4% of GDP to stimulate the economy in fiscal 2017 if China’s stock slump persists for longer than expected.
The cabinet has nominated Veerathai Santiprabhob as the new Bank of Thailand governor. Mr Veerathai, who sits on the central bank’s Monetary Policy Committee (MPC), will have the daunting task of steering the economy through difficult times with limited monetary policy ammunition. He will lead the Bank of Thailand for five years after Prasarn Trairatvorakul steps down at the end of September.
The Information and Communication Technology (ICT) Ministry is making a last-ditch effort to convince the cabinet to auction 30 megahertz of bandwidth on the 1800-MHz spectrum for the country’s first fourth-generation (4G) sale scheduled in November. The National Broadcasting and Telecommunications Commission (NBTC) has recommended offering only 25 MHz for two licences.
TMB Bank said it had no plans to set aside additional loan-loss provisions in the short term, saying it remained comfortable with current coverage and stringent risk management despite rising bad loans and a persistently lacklustre economy.
Business optimism declined in the second quarter, weighed down by the stoppage of unauthorised fishing trawlers, a severe drought, the failure of aviation regulators to meet international safety standards and the cooling economies of major trade counterparts. The Grant Thornton International Business Report said confidence in the Thai economic outlook declined to 10% from 36% in the previous three months.
Italian-Thai Development Plc (ITD) will enter into a concession agreement next month with the Myanmar government to develop the first phase of the long-delayed Dawei Special Economic Zone (SEZ) in southeastern Myanmar.
Bangchak Petroleum (BCP) is setting an investment budget of 1 billion baht to raise oil refining by 17% to 140,000 barrels per day (bpd). It will begin investing in the second half of the year and bring the new capacity onstream by 2017.
Sena Development Plc has teamed up with the contractor Sangfah Construction & Engineering Co and Aira Capital Plc to develop a 2-billion-baht office building in central Bangkok.
A price war among local brokerages is flaring up again, triggered by ASL Securities’ move to charge a commission fee for internet stock trading as low as 0.08% of transaction value.
Coming up this week: China will announce trade data for June today, followed by June FDI figures tomorrow. Euro zone industrial production for May is due the same day.
China will announce second-quarter GDP, along with June retail sales and industrial production on Wednesday.
The US housing market index for July and euro zone CPI inflation will be released on Thursday.
US housing starts, building permits and inflation data are due on Friday.
Stocks to watch: Asia Plus Securities recommends accumulating stocks such as TASCO and CK that could benefit from government projects. Laggards such as FORTH, TKS, SVOA and TIPCO are also recommended buys.
Capital Nomura Securities has buy recommendations for renewable energy-related stocks that could gain from the next state auction. They are TPCH, BCP, DEMCO, SUPER, SPCG, GUNKUL, AKR, TRT and QTC.
Technical view: Bualuang Securities sees support at 1,450 points and resistance at 1,520 this week. Asia Plus pegs support at 1,460 and resistance at 1,500.
