Improving rate-cut outlook buoys equities

RECAP: Shares advanced in most Asian markets yesterday after US stocks resumed a rally fuelled by fresh data that backed the case for the Federal Reserve to cut interest rates more than currently anticipated.

Thai shares moved in a range of 1,383.89 and 1,407.87 points this week, before closing yesterday at 1,405.09, an increase of 1.01% from the week before, with daily turnover averaging 35.05 billion baht.

Institutional investors were net buyers of 1.79 billion baht, followed by brokers at 195.37 million. Foreign investors were net sellers of 1.63 billion baht, followed by retail investors at 352.77 million.

NEWSMAKERS: The final US GDP growth figure for the third quarter was revised down to 4.9% year-on-year, from 5.2% estimated earlier. Personal consumption data was also softer than economists had anticipated, suggesting the economy is cooling and supporting the case for lower interest rates.

• Two senior Fed officials insisted this week that it is too early to discuss rate cuts in early 2024. However, the market still gives a 63.4% likelihood of a 25-basis-point reduction in March.
• US housing starts in November rose by 14.8% to 1.56 million units, a six-month high. The surge further boosts confidence in a gradual or soft-landing slowdown of the US economy.
• The Bank of Japan on Tuesday maintained its long-standing, ultra-loose monetary policy and offered no guidance on its plans in the new year, sending the yen down and boosting stocks. Speculation had been swirling for weeks that officials would shift away from negative interest rates. Japanese core inflation eased as expected in November rising only 2.5% year-on-year, compared with 2.9% in October.
• Euro zone inflation in November eased to 2.4% year-on-year, down from 2.9% in October, but the European Central bank continues to signal that it is in no hurry to cut interest rates.
• British inflation has slowed sharply to a two-year low of 3.9% on falling petrol prices, after months of aggressive interest-rate hikes by the Bank of England.
• A key measure of foreign investment in China fell to the lowest in nearly four years in November. New utilised foreign capital totalled 53.3 billion yuan ($7.5 billion) last month, down 19.5% from a year earlier, according to Bloomberg calculations.
• Brent crude futures fell yesterday after Angola announced it was quitting Opec amid a dispute over output quotas. The country's energy minister said membership does not benefit Angola, which produces about 1.1 million barrels of oil per day.
• The US is considering imposing tariffs on Chinese goods such as electric vehicles, solar energy products and EV batteries to protect US manufacturers, The Wall Street Journal reported.
• Nike has downgraded its growth forecast for 2023 to 1% amid weaker performance in the Chinese, European and Middle Eastern markets, leading to a 10% drop in its stock price in after-hours trading on Thursday. It also plans to cut costs by $2 billion over the next three years.
• Maersk announced it is suspending shipping through the Babel-Mandeb Strait in the Red Sea due to threats of attacks from the Houthi rebels in Yemen.
• China on Thursday said it would suspend special tariff rebates on selected chemical imports from Taiwan, in response to the latter's "unilateral, discriminatory trade restrictions".
• China has announced tough rules for non-banking payment institutions amid an ongoing clampdown on the country's $57-trillion financial sector. The new rules include tighter supervision of digital payment service providers including Alipay and WeChat Pay.
• Honda is recalling 4.5 million cars in the US and elsewhere because a fuel pump may fail, causing vehicles to stall while driving and increasing the risk of a crash.
• South Korea's financial watchdog has recommended fines of at least 10 billion won ($7.7 million) on HSBC and BNP Paribas for so-called naked short selling, which is illegal in the country.
• Japan is set to partially lift its ban on ride-hailing services starting in April amid a taxi driver shortage. Drivers will be allowed to operate in specific areas at certain times under the guidance of taxi companies when there is a lack of rides available.
• The Stock Exchange of Thailand is proposing to expand disclosure of the names of major shareholders of listed securities and investment companies, including anyone with a stake of at least 0.5%.
• Revenue of Thai listed companies generated from overseas investments reached a 17-year high of 6.21 trillion baht in 2022, an increase of 1.83 trillion from a year earlier, according to the SET.
• The Ministry of Finance expects to receive an answer regarding the legality of the planned 10,000-baht digital wallet handout from the Council of State in January, with the scheme starting in May, says Deputy Finance Minister Julapun Amornvivat.
• The fiscal 2024 budget of 3.48 trillion baht is expected to be ready in early May, seven months after the start of the year, Mr Julapun said on Wednesday.
• The cabinet approved a cap on diesel prices at 30 baht a litre and LPG at 423 baht per 15kg tank until March. Electricity rates are set at 3.99 baht per unit for consumption up to 300 units. Rates for higher consumption will be announced on Jan 1 but will not exceed 4.20 baht, down from 4.68 baht approved by regulators.
• The cabinet approved a budget of 41 billion baht for incentives and subsidies to support production and sales of electric vehicles from 2024-27. The Federation of Thai Industries expects the tax breaks will support new manufacturers, estimating a break-even point for production at 100,000 units per year.
• Honda Motor has become the first Japanese automaker to officially start making an electric SUV in Thailand. The first-ever e:N1 with local parts rolled off the production line in Rojana Industrial Park in Prachin Buri.
• The French oil and gas company TotalEnergies said on Thursday it would sell a 25.5% stake in the Seagreen offshore wind farm in Scotland to Thailand's PTT Exploration and Production (PTTEP) for £522 million ($661 million).
• The SET announced revisions to the SET50 and SET100 indices for the first half of 2024. In the SET50, KCE has been included while TIDLOR has been removed. In the SET100, AEONTS, ICHI, ITC, M, MOSHI, RBF, SAPPE, SISB, TKN and TOA have been added. ACE, CKP, MBK, PSL, PTG, SABUY, STEC, THANI, TIPH and TQM have been removed.
• Prime Minister Srettha Thavisin said the government was negotiating with 30 Japanese companies for investment in the southern Land Bridge project and discussing funding with the Japanese financial services group MUFG.
• The Tourism Authority of Thailand is preparing a campaign in collaboration with Saudi Airlines, hoping to bring some 300,000 Saudi tourists to Thailand next year, generating 27.6 billion baht.
• The government is abandoning the 300-baht tourism fee that was postponed many times during the previous administration, seeking an alternative source of funds for insurance for foreign tourists. The Ministry of Tourism and Sports is studying several options to offer coverage of 500,000 baht per person in case of injury and 1 million baht in the event of death from an accident.
• The Thai General Insurance Association projects industry growth of 5-6% in 2024 with premiums of 301 billion to 303 billion baht, thanks to the high growth of EV and health insurance.
• The University of the Thai Chamber of Commerce expects New Year festival spending to increase by 2.8% year-on-year to a four-year high, but says consumers will be cautious due to economic uncertainties.

COMING UP: The US will release the October housing price index on Tuesday. China will report November industrial sector profits on Wednesday. On Thursday the US releases weekly unemployment benefit applications, pending home sales and oil inventories. Locally, the Ministry of Commerce will release November trade figures next week.

STOCKS TO WATCH: InnovestX Securities recommends selective buying based on three themes with specific drivers. First are big-cap stocks in the SET50 that are expected to be investment target of the Thai ESG Fund. Stocks with ESG ratings between A and AAA, and with prices that have underperformed the SET are OR, HMPRO and AOT. Outperformers with ESG ratings of AAA, strong operating results and expected dividend yields above 5% are PTT and KTB.

• The second theme dollar-cost averaging investment. Given how far the SET Index has fallen, risk is low and many shares are undervalued. Top picks are BBL, BDMS, BEM, CPALL, PTT and SCC.
• The third theme is 10 top picks for 2024 based on expected strong growth and benefits from economic and investment stimulus: AMATA, BBL, BEM, BDMS, CPALL, CRC, GULF, OR, SCC and SCGP.
• Tisco Securities' picks include ADVANC, AP, BAM, CPALL, CPN, ITC, LH, SCB and SPALI. Stocks expected to be targets for year-end domestic fund inflows are ADVANC, BBL, BDMS, BEM, CPALL, CRC, HMPRO and SCB. Good dividend stocks for gradual accumulation are AP, BAM, BTSGIF, NYT, SCB, SCCC, SPALI and TASCO.
• As well, Tisco suggests stocks benefitting from lower bond yields: MTC, TIDLOR, AEONTS, GPSC, GULF, EGCO and RATCH; and beneficiaries of the E-Receipt programme: CPALL, COM7, CRC and HMPRO.

TECHNICAL VIEW: InnovestX sees support at 1,380 points and resistance at 1,415. Tisco Securities sees support at 1,384 and resistance at 1,420.