RECAP: Asian shares extended their rally yesterday in the afterglow of an outsized US interest rate cut, while the yen edged higher as the Bank of Japan held rates steady and stayed upbeat on the economy.
The SET index moved in a range of 1,423.20 and 1,462.35 points this week, before closing yesterday at 1,451.69, up 1.9% from the previous week, with solid daily turnover averaging 63.75 billion baht.
Foreign investors were net buyers of 4.47 billion baht, followed by brokerage firms at 1.09 billion. Retail investors were net sellers of 3.68 billion baht, followed by institutional investors at 1.88 billion.
NEWSMAKERS: The Fed's decision to slash interest rates this week is a "very positive sign" about the health of the world's biggest economy, US Treasury Secretary Janet Yellen said on Thursday.
- The Fed's 50-basis-points reduction to a range of 4.75% to 5.00% was its first cut in four years. Markets interpreted this as a sign of concern over economic conditions and a slowing labour market.
- A survey of Fed members indicates rates will fall by another 50bps this year. BofA anticipates 75bps in cuts by year-end, while Goldman Sachs expects a series of 25bps cuts until June.
- Gold prices steadied near record highs, with spot gold was trading yesterday around $2,586 an ounce after coming within 8 cents of $2,600 on Wednesday after the Fed move.
- Bitcoin touched a three-week high in response to the US rate decision. The top cryptocurrency was holding steady around $63,000 yesterday.
- The Bank of Japan left its rate unchanged at 0.25% yesterday, signalling it sees no need to hurry with increases as it monitors financial markets, after a July increase spooked investors.
- The People's Bank of China left loan prime rates unchanged yesterday. The five-year rate, a reference for long-term credit including mortgages, remains at 3.85%.
- The Chinese yuan closed near a 16-month high at 7.066 per dollar on Thursday, underpinned by market expectations that US easing offers Beijing some leeway on monetary policy.
- The Bank of England held rates at 5%, as expected, after a reduction of 25bps last month, but signalled it was still on the path to lower them from a 16-year high of 5% as inflation was moderating.
- US retail sales rose unexpectedly by 0.1% in August, supported by online purchases that masked mixed results at other merchants. Industrial production beat forecasts with an 0.8% gain in August from July.
- The number of foreign visitors to Japan rose 36% year-on-year to 2.93 million in August, a record high for the month, government data showed.
- Travel volume in China during the mid-Autumn Festival holiday reached 630 million trips, up 31% year-on-year.
- Chinese regulators will consider allowing big cities to relax restrictions on non-local property buyers, along with smaller down payments and lower mortgage rates for second residences.
- Chinese retail sales grew 2.1% and industrial production in August rose 4.5%, lower than expected, reflecting an imbalance in the economy with supply outpacing consumption.
- Indonesia's central bank made a surprise interest rate cut of 25 basis point on Wednesday, its first in three years, to 6.00%.
- Malaysia will offer tax breaks as it tries to revive Forest City, the $100-billion megaproject backed by the struggling Chinese developer Country Garden. In the pipeline are corporate tax rates of 0-5%, and personal income tax capped at 15% for skilled workers.
- Singapore's non-oil exports rose 10.7% year-on-year in August, buoyed by a rise in both electronic and non-electronic products.
- Vietnam is preparing to remove a requirement for full upfront payment for equity transactions by foreign investors, a hurdle that has hampered an upgrade of the Ho Chi Minh exchange.
- The Thai baht is on course for its biggest quarterly gain since 1998, threatening to derail a recovery in tourism and exports. The currency has surged 10% against the dollar since the end of June and was hovering close to 33 on Friday.
- The Bank of Thailand need not reduce interest rates immediately just because the US has made a move, as Thailand's economic outlook remains unchanged, central bank governor Sethaput Suthiwartnarueput said on Friday.
- The Ministry of Finance is reviewing its stock portfolio valued at roughly 400 billion baht, planning to potentially sell off certain portions, said permanent secretary Lavaron Sangsnit.
- The cabinet approved a 10,000-baht handout starting on Sept 25 to 14.5 million welfare cardholders and disabled persons, costing 145 billion baht and expected to boost GDP by 0.35% this year.
- Five consortia have applied for virtual bank licences as of the Sept 19 deadline, with winners to be picked next year. The applicants are KTB-ADVANC-OR group, Lightnet-WeLab group, Thailand Post-Sahaphat-BTS-VGI-Sea Group, with pending confirmation from TRUE-Ant Group and SCBX-KakaoBank-Webank group.
- The Thai Condominium Association has urged regulators to ease lending restrictions and interest rates as 86 billion baht worth of new units await transfer in Q4. It expects third-quarter sales will be slow as baht appreciation is affecting foreign customers and developers are delaying launches.
- Overdue debt payments in August were up 18% on housing loans and 33% on personal loans from the month before, the Credit Bureau said. Non-performing loans are expected to pass 1.2 trillion baht in the third quarter.
- The Federation of Thai Industries said the industrial confidence index in August fell to 87.7 from 89.3 in July due to concerns about flooding, slowing domestic demand and high auto loan rejections.
- The Ministry of Tourism and Sports is considering reviving the "Half-Half" subsidy programme to stimulate domestic tourism.
- A total of 24.8 million foreign tourists arrived from Jan 1 to Sept 15, generating 1.16 trillion baht, said the Ministry of Tourism and Sports. The top five markets were China, Malaysia, India, South Korea and Russia.
- Average fuel consumption in Thailand in the first seven months was 156.5 million litres a day, up 0.2% year-on-year, said the Department of Energy Business. Aviation fuel usage rose 16.3% and diesel 3.3%, while petrol consumption fell 1.4% amid rising adoption of EVs.
- The Board of Investment has approved a 13.5-billion-baht project by China-based Haier Smart Home Co, which will build a plant in Chon Buri to make smart air-conditioners for local and export sales.
COMING UP: On Monday, the US will release manufacturing and services purchasing managers' index updates and the UK will report composite PMI. On Tuesday, the Reserve Bank of Australia will hold a rate meeting, the US will update consumer confidence and Japan will report service producer prices.
RELATED
- On Wednesday, the US will report quarterly GDP and new home sales, and Fed chairman Jerome Powell speaks. The Bank of Japan will announce updated national inflation data. Thursday brings US durable goods orders and a Swiss interest rate decision. Due Friday are US trade data and personal consumption expenditures, French consumer spending, Spanish inflation and German unemployment.
- Domestically, on Thursday Hyundai will announce a new EV project.
STOCKS TO WATCH: Trinity Securities recommends domestic plays with a low connection to the global economy. These include retail stocks CPALL, CRC, HMPRO, BJC, GLOBAL and COM7; real estate (AWC and CPN) and finance (KTC and SAWAD).
- Bond-liked groups that will benefit from falling yields are interesting because there will be a higher dividend yield gap. These include infrastructure funds, real estate investment trusts and utilities.
- InnovestX Securities sees limited upside for the SET after its recent run-up, but the US rate cut should help support investment in risky assets. For investors looking for turnaround plays with attractive valuations, it suggests AP, GPSC, MTC and AMATA.
- Beneficiaries of a declining interest rate cycle include leasing (MTC), property development (AP), commerce (CPALL), utilities (GULF) and REITs (LHHOTEL and DIF). Finally, look for stocks expected to benefit from investments by the Vayupak Fund, namely SET100 firms with dividend yields of at least 3.5%, high ESG ratings and profit growth expected in 2025. Its picks are KTB, BBL, BCP, ADVANC and HMPRO.
TECHNICAL VIEW: Finansia Syrus sees support at 1,440 points and resistance at 1,480. DBS Vickers Securities sees support at 1,430 and resistance at 1,480.
