Asian bourses advance but SET could see volatility

RECAP: Most Asian stock markets rose yesterday while currencies fell against a firmer US dollar, as investors awaited a key US jobs report for more clues about interest rates after mixed signals from global central banks.

The Thai stock market could be volatile this month as investors digest fourth-quarter earnings. Bloomberg warns of a “negative surprise” with 19% of companies missing consensus forecasts so far.

Thai shares moved in a range of 1,671.00 and 1,692.94 points this week, before closing yesterday at 1,688.36, up 0.4% from the previous week in daily turnover averaging 62.21 billion baht.

Institutions were net buyers of 3.16 billion baht, followed by retail investors at 1.96 billion and brokers at 1.66 billion. Foreign investors were net sellers of 6.78 billion baht.

NEWSMAKERS: The dollar slid on Thursday after the US Federal Reserve said it had turned a corner in the fight against inflation. The Fed on Wednesday raised its benchmark interest rate by 25 basis points, in line with market expectations that take it to a 15-year high of 4.5% to 4.75%.

• The European Central Bank, as expected, raised its policy rate 25 basis points to 3% on Thursday, and signalled it may further raise rates by another 50 basis points at the March meeting, then possibly pause to monitor conditions.
• The Bank of England raised interest rates a half point to 4%, saying more increases will be needed if signs of an inflationary spiral persist. Policymakers said strong pay growth and a labour shortage are feeding price pressures in the struggling UK economy.
• Opec and its allies agreed on Wednesday to maintain an output cut of 2 million barrels per day, about 2% of world demand, to support oil prices amid hopes of higher Chinese demand and uncertain prospects for Russian supply.
• Apple on Thursday reported its first quarterly revenue drop after more than three years of growth, blaming production headwinds caused by Covid disruptions in China and weakening global demand. For the three months to Dec 31, revenue fell 5.5% to $117.2 billion, with sales of the cash-cow iPhone down 8.2% year-on-year to $65.8 billion.
• Apple CEO Tim Cook says India will be a “major focus” for the company, which is looking to tap the country both as an alternative production base to China and as a source of growth. India was a rare bright spot for the company in Q4 with double-digit revenue growth.
• Adani Group stocks plummeted after its flagship company scrapped a fully subscribed share sale on Wednesday, deepening losses in the Indian conglomerate’s market value to over $100 billion in the wake of scathing allegations of fraud by a US short-seller.
• Sony Group reported a 7.8% year-on-year drop in operating profit to 428.7 billion yen ($3.3 billion) in the fourth quarter of 2022 as its movie division stumbled. The electronics and entertainment giant now expects operating profit for the fiscal year ending March to decline 2% to 1.18 trillion yen, but still 20 billion more than the previous forecast, driven in part by sales of its PlayStation 5.
• Japan’s Z Holdings plans to merge with its two wholly owned subsidiaries — the internet portal Yahoo Japan and the messaging app Line — in an effort to revamp operations. The firm has been struggling to grow amid competition with rival platforms such as Rakuten and TikTok.
• The Japanese farm equipment maker Kubota is bucking trends by moving production overseas despite a weak yen as it seeks to create a supply system less susceptible to currency volatility. According to Nikkei Asia, Kubota is increasing investments in countries like the US and India with a plan to lift its offshore production ratio to 50% from current 30%.
• The geothermal subsidiary of the Indonesian oil and gas giant Pertamina aims to raise up to 9.8 trillion rupiah ($653 million) in an initial public offering to fund capacity expansion. Pertamina Geothermal Energy will be the first of several Pertamina units to go public when it lists in Jakarta on Feb 24.
• Global crude steel production fell for the first time in seven years in 2022 on the back of China’s strict zero-Covid policy. The World Steel Association said output slipped 4.2% to 1.87 billion tonnes. China, which accounts for over half of global production, saw a 2.1% drop.
• The price of diesel in Thailand is set to decrease to 34.50 baht a litre on Feb 15 from 34.94 baht, following a decline in global crude oil prices.
• The cabinet has approved the 5G business project of National Telecom (NT) and operational expenditure of 6.7 billion baht to capitalise on the 26-gigahertz spectrum range until the spectrum licence expires in 2036.
• Bank of Ayudhya (BAY) continues to expand its financial business in Asean, targeting a regional customer base exceeding 500,000 this year. The bank says three merger and acquisition deals in Vietnam, Indonesia and the Philippines are expected to be completed in the first half of 2023.
• Property Perfect (PF) plans to spend 2 billion baht to develop a mixed-use project and its new headquarters on Ratchadaphisek Road in Huai Khwang, with retail space managed by the operator of the Jodd Fairs night bazaar.
• Thailand targets to export 7.5 million tonnes of rice this year slightly lower than the estimated 7.69 million tonnes in 2022, said the Foreign Trade Department, noting global demand for Thai rice remains strong despite high prices.
• SCG Chemicals is preparing to jointly develop a bio-based ethylene factory in Thailand to produce plastic materials made from plants. It will start making bio-ethylene, a major feedstock used for making bio-based polyethylene, in 2025.
• The manufacturing production index (MPI) fell 8.2% year-on-year in December to 93.98 points, the lowest level in 28 months, as the world economy contracted. The full-year MPI, however, climbed 0.6% year-on-year to 98.32 points.
• The cabinet this week approved minimum wage increases for skilled workers in 17 professions, effective within 90 days after being published in the Royal Gazette. Workers eligible for the new rates ranging from 465 to 715 baht per day are in three sectors including industrial engineering, and services.
• Kiatnakin Phatra Financial Group, a holding company of Kiatnakin Phatra Bank (KKP), expects total loan growth to ease to 13% this year, from 21.4% in 2022, on higher risk of rising financial costs and the global recession.
• The tourism confidence index in the fourth quarter stood at 72, up 7 points from the third quarter but still below the fourth quarter of 2018, prior to the pandemic. The index was derived from a survey of 740 tourism operators between Nov 20 and Dec 14.
• The Export-Import Bank of Thailand aims to increase the proportion of loans to businesses in the bio, circular and green economy (BCG) to 50% of its total in the next three years from 28% now. The bank’s “green” outstanding loans stood at 47.6 billion baht last year.
• The e-marketplace JD Central will end its operations on March 3 after six years of operating an e-commerce business in the country. The joint venture between Central Group and the Chinese internet giant JD.com is the third biggest local e-marketplace behind Lazada and Shopee. JD.com is also shutting down in Indonesia at the end of March.
• Sansiri Plc is planning to launch 52 new projects worth a combined 75 billion baht this year, with the aim of securing an all-time high of 55 billion baht in presales and 40 billion in revenue.

COMING UP: Huawei Technologies (Thailand) on Tuesday will hold a briefing on its achievements in Thailand and business direction for 2023. KBank Private Banking plans a briefing on investment trends around the world and portfolio adjustment strategies.

STOCKS TO WATCH: Tisco Securities sees the election as an important driver of the stock market in the next couple of months, but with limited upside gains. It recommends firms expected to report strong Q4 and full-year results for 2022, as well as those that pay good dividends. Good speculative stocks for February are AP, BBL, CKP, GLOBAL, MAJOR, MAKRO, PRM and TIPH.

• Daol Securities recommends EA, GPSC, WHA and NEX as they will benefit from new government measures to support electric vehicle battery investment.

TECHNICAL VIEW: Asia Plus Securities sees support at 1,658 points and resistance at 1,700. Tisco Securities sees support at 1,660 and resistance at 1,700.