RECAP: Asian markets sold off sharply on Friday and Europe followed as investors braced for a hefty US rate hike next week amid growing concerns of a global recession following warnings from the World Bank and the International Monetary Fund.
On the domestic front, the baht slipped below 37 to the US dollar -- its lowest since late 2006. The SET extended its sideways-down movement to close at 1,630 points. Investors are growing more anxious about a possible recession and bracing for another big interest-rate increase by the US Federal Reserve this week.
Thailand's positive economic outlook should help the SET to outperform global peers, however, with analysts expecting continued fund inflows in the medium term. Domestic and reopening plays, particularly ones with unique catalysts, should continue to outperform the market.
The SET Index moved in a range of 1,629.31 and 1,672.64 points this week before closing yesterday at 1,630.40, down 1.5% from the previous week, in daily turnover averaging 68.80 billion baht.
Foreign investors were net sellers of 4.18 billion baht, followed by institutions at 891.24 million. Retail were net buyers 2.98 billion baht and brokers bought 2.09 billion baht.
NEWSMAKERS: Businesses have mixed reactions to the minimum wage increase approved by the cabinet on Tuesday as they face numerous economic challenges. The new daily rates ranging from 328 to 354 baht take effect from Oct 1. The last increase was in January 2020, which took the minimum to a range of 313-336 baht.
- The Economic Intelligence Center (EIC) of Siam Commercial Bank, has upgraded its 2022 inflation projection to 6.1%, from 5.9% forecast earlier, citing external factors such as higher energy prices amid geopolitical conflict. Inflation should fall back near the Bank of Thailand's target range next year, it added.
- China's economy showed signs of recovery in August as Beijing rolled out stimulus measures, but a property slump and Covid lockdowns cloud the outlook. Industrial production rose 4.2% yea-on-year, retail sales rose 5.4% and the urban jobless rate fell to 5.3% from 5.4% in July.
- The Chinese yuan weakened past 7 per US dollar for the first time in two years yesterday, pressured by strong market expectations for an even more aggressive US interest rate increase next week.
- A major software upgrade to the Ethereum blockchain has eliminated the wasteful practice of mining and reduced energy use by 99%. But some disgruntled cryptocurrency miners are fighting back with a "fork", or blockchain split, to try to retain their livelihood.
- China faces its biggest drop in oil demand in more than three decades as Covid lockdowns and a property crisis weigh on growth, the International Energy Agency said.
- The Thai Hotels Association (THA) says hotels are struggling to raise room rates amid intense competition, while operating costs are rising because of higher electricity bills and wages. THA president Marisa Sukosol Nunbhakdi said those two expenditures usually account for the largest costs share of hoteliers' costs.
- Dusit Thani Plc aims to increase food business revenue to 2.5 billion baht by 2027, raising its contribution to total revenue to 25-30%. Group CEO Suphajee Suthumpun said that of the four business units the firm has diversified into since 2016, food will see the fastest growth at 15-20% per year, with annual earnings around 1 billion baht.
- Central Pattana Plc on Tuesday opened Centara Korat Hotel, its first mixed-use project in the Northeast and one of 37 hotel projects worth a combined 10 billion baht it will develop from 2022-26 in 27 provinces.
- PTT Global Chemical has opened Southeast Asia's largest plant producing high-quality and food-grade recycled plastic resins, aiming to recycle 60,000 tonnes of used plastics annually. The facility will be operated by Envicco, a 70:30 joint venture between PTTGC and Alpla Co, a subsidiary of Austria-based Alpla Group, an international plastic manufacturer and recycler.
- The Bank of Thailand has eased the conditions for unsecured loan restructuring by its Debt Clinic programme to attract more users. Borrowers who were classified as non-performing loan (NPL) clients of financial institutions before April 1 this year can apply for the restructuring scheme.
- Thailand is preparing to establish new joint trade committees (JTCs) with Saudi Arabia, the United Arab Emirates, Egypt, Austria and Kazakhstan next year to boost exports, says the Trade Negotiations Department.
- Thailand will introduce a carbon tax in line with global trends, according to the Excise Department. EU members will be among the first countries to impose the tax, starting next year, on products or processes with high carbon dioxide emissions, such as cement, iron, aluminium, fertiliser and electricity production. Even if Thailand does not levy the tax on local products, its exports to markets that charge this tax will be charged.
- The government has stepped up efforts to set clear goals and grant incentives to boost EV production and consumption. The National EV Policy Committee wants EVs to constitute 50% of locally made vehicles by 2030, part of an ambitious plan to make the country a regional EV production hub.
- Gulf Energy Development, Thailand's biggest private power producer by market value, has purchased 49% of Jackson Generation, a gas-fired power plant in Illinois, for US$4 million as it embarks on its US expansion. All told, GULF has a 120-billion-baht capital spending budget for 2022-26.
- Bangchak Corporation Plc is gearing up for new investments in Norway to expand oil and gas exploration and production. The company expects to conclude one or two deals this year, said Chaiwat Kovavisarach, chief executive of BCP and chairman of Norway-based Okea ASA, an oil and gas drilling company. In 2018, BCP acquired a 45.7% share in Oslo-listed Okea.
COMING UP: The US will report updated housing loan data on Monday. On Tuesday, Japan will report August inflation and Chins will announce its prime loan rate. The US will release building permit and housing start data. On Wednesday, the Fed will announce its rate decision and the US will release August existing home sales. Locally, Thailand's Monetary Policy Committee (MPC) will meet on Sept 28.
STOCKS TO WATCH: Finansia Syrus Securities says the European energy crisis will affect Thai listed firms' factories in Europe. TU, for example, has five food processing sites in the EU that account for 28% of its total revenue. The company has new machinery that helps reduce gas consumption and has increased product prices to cover higher energy costs; hence, it has seen limited impact so far.
- In terms of exports to Europe, XO has the highest exposure at 82% of its total revenue, followed by CFRESH (61%), KCE (45%), DELTA (26%), NRF (19%), TFG (15%), SAPPE (12%), HANA (10%), STA (8%), and GFPT (7%). XO is experiencing negative sentiment from the crisis.
- Finansia Syrus expects tourist arrivals could reach 34 million in 2023 as many economies reopen, helping airport, airline and hotel firms. Although high energy costs in Europe pressure MINT and SHR, their net profit should recover in the third quarter. The broker's picks are AOT, BA, DUSIT and CENTEL.
- Kasikorn Securities recommends investors avoid foreign-targeted stocks for a while due to interest rate hikes globally. It suggests investments in domestic plays such as CK, PLANB, CPALL, SAWAD and SCB.
TECHNICAL VIEW: Thanachart Securities sees support 1,622 points and resistance ay 1,660. Globlex Securities sees support at 1,626 and resistance at 1,658.
