Asian shares fall as rate-hike bets increase

RECAP: Asian stocks slid yesterday to cap a busy first week of the quarter for financial markets, with the dollar standing tall and bonds tumbling as resilient US jobs data has investors bracing for interest rates to head higher still.

The Stock Exchange of Thailand index slipped below 1,500 points as external risks and domestic political uncertainty affected sentiment.

The index moved in a range of 1,474.94 and 1,520.02 points this week before closing yesterday at 1,490.51, down 0.8% from the previous week, in daily turnover averaging 37.78 billion baht.

Institutions were net buyers of 3.22 billion baht, followed by brokers at 798.07 million. Foreign investors were net sellers of 6.51 billion baht, followed by retail investors at 2.49 billion.

NEWSMAKERS: Almost all US Federal Reserve officials at their June meeting indicated further tightening is likely, if at a slower pace than before, according to minutes released on Wednesday. In any case, rates are probably on track to rise when the Fed meets on July 25-26.

• US companies saw an unexpected spike in hiring in June. The ADP National Employment Report tallied 497,000 new private-sector jobs, far exceeding economists' expectations for 228,000 jobs and the May total of 267,000.
• Services activity in China expanded at the slowest pace in five months in June, as weakening demand weighed on post-pandemic recovery momentum. The Caixin/S&P Global services purchasing managers' index (PMI) eased to 53.9 from 57.1 in May.
• The market consensus on Chinese economic growth for the full year has edged higher, a new Nikkei survey shows, as weaker data in recent months has fuelled expectations for more stimulus. But the yuan near a 15-year low against the dollar could limit Beijing's options.
• Goldman Sachs analysts have downgraded Agricultural Bank of China from "Neutral" to "Sell", and Industrial and Commercial Bank of China and Industrial Bank from "Buy" to "Sell".
• Chinese customs officials are banning food imports from about one-fifth of Japanese prefectures for safety reasons, citing Japan's move to discharge contaminated water from the defunct Fukushima nuclear reactor into the sea. Tokyo insists the plan meets international safety standards.
• Japanese companies offered to raise wages by an average 3.58% in this year's spring wage talks, the first time in 29 years that increases have topped 3%, to cope with historically high inflation.
• Nominal base salaries in Japan rose 1.8% in May, the fastest pace in 28 years, government data showed on Friday, adding fuel to the debate over when the central bank will unwind its ultra-loose monetary stimulus.
• Samsung Electronics' June-quarter profit is expected to plunge 96% year-on-year to the lowest for any quarter in more than 14 years, as a chip glut continues to drive large losses in the tech giant's cash cow business.
• South Korea's Samsung Display has filed a lawsuit accusing BOE Technology of China of infringing five of its patents for displays used in mobile devices including the Apple iPhone 12.
• The Chinese automaker BYD plans to invest $620 million in a new industrial complex in northeastern Brazil, aiming to boost local production to offer more competitive prices.
• Threads, the Instagram-linked "Twitter killer", this week became the most rapidly downloaded app ever, with 30 million downloads within the first 24 hours of its launch. Twitter has threatened to sue Meta, the parent of Facebook and Instagram, as the battle of the tech billionaires heats up.
• Saudi Arabia said Monday that it would extend a cut in oil production of 1 million barrels a day that it announced in June through at least August, trying to push up stubbornly weak oil prices.
• Citigroup has cut its 2023 economic growth forecast for the euro zone, citing pressures from a high interest rate environment as the European Central Bank (ECB) has signalled further hikes.
• Bitcoin hit a 13-month high of $31,500 earlier this week, helped by optimism that US regulators will approve at least one exchange-traded fund based on the cryptocurrency.
• The Investment Analysts Association has revised down its year-end SET Index forecast to 1,630 points from 1,707, saying domestic politics, interest rates and geopolitics are still factors to monitor in the third quarter.
• The Securities and Exchange Commission has filed charges with the Department of Special Investigation (DSI), accusing Stark Corp and nine others, including the firm's largest shareholder, of financial misconduct. The SEC ordered the seizure of the assets of Stark and the nine individuals accused for 180 days. About 11,000 individual shareholders have filed fraud complaints against STARK and its former executives.
• Headline inflation rose just 0.23% in June from a year ago, slowing from a 0.53% rise in May. The first-half average was 2.5%. The Ministry of Commerce now predicts full-year inflation will be 1-2%.
• The Thai National Shippers' Council has trimmed its export growth forecast to between -0.5% to 1%, based on high uncertainty surrounding major trading partners the US, the EU and China.
• The SEC is tightening rules for cryptocurrency trading to increase investor protection, demanding digital asset operators include risk disclosure in their advertisements and prohibiting them from providing services or supporting deposit taking and lending.
• SET-listed Super Energy Corp Plc (SUPER), the country's largest operator of solar farms, is restructuring its business by acquiring two new renewable energy assets and selling what it considers to be an inactive asset, to help make the company an agile organisation.
• Svolt Energy Technology, a Chinese maker of batteries and energy storage systems, is spending 1.25 billion baht to build an electric vehicle (EV) battery factory in Chon Buri to serve Chinese and Japanese EV makers.
• TPC Power Holding (TPCH), the renewable power generation arm of the construction firm Thai Polycons Plc, expects revenue to grow by 30-40% in 2023, from 2.7 billion baht last year, thanks to increased management of power plants.
• Heng Leasing and Capital Plc expects to maintain its maximum interest rate through next year, even as the central bank raises rates, because of loan portfolio adjustments.
• The Chearavanont brothers of the CP Group have retained the top spot on the 2023 Forbes list of Thailand's 50 richest, with the combined wealth of all tycoons rising nearly 15%.
• Home Product Center Plc (HMPRO), the operator of HomePro stores, has invested 4 billion baht this year in establishing new outlets.
• Starbucks Thailand has set an ambitious plan to open 335 new stores from 2023-30.
• Household debt in the first quarter this year rose to 16 trillion baht, accounting for 90.6% of GDP. The Bank of Thailand is seeking ways to cut persistent debt in order to reduce the burden of households and help consumers exit the debt cycle faster.
• SET-listed PTT Oil and Retail Business (OR) continues to expand its non-oil businesses overseas by opening laundry services at a filling station in Cambodia.
• The Thai unit of Investree, the Asean-based financial technology company, reported 200% growth in business in the first quarter this year as SMEs relied more on crowdfunding platforms.

COMING UP: China will report June consumer and producer prices on Monday and the US will release June inflation data on Wednesday. The US will update unemployment claims on Thursday and the EU will report May industrial production.

• Locally, the SET will release June trading data on Monday. On Thursday, parliament will vote for the new prime minister.

STOCKS TO WATCH: InnovestX Securities says five outstanding stocks for the third quarter -- BBL, BDMS, BEM, HMPRO and OSP -- are expected to see little impact from the policies of the new government and their profits should recover.

• Yuanta Securities recommends stocks with low prices and attractive valuations. It recommends investors gradually accumulate shares and wait for stimulus measures from the new government.
• Its recommendations are CPALL in the retail sector; SAWAD, SCAP and NCAP in finance; KBANK and SCB among banks; CBG, OSP, HTC and NSL for food and beverages; and ADVANC in communication.

TECHNICAL VIEW: Kingsford Securities sees support at 1,475 points and resistance at 1,500. InnovestX Securities sees support at 1,465 and resistance at 1,520.