China optimism spurs Asian shares higher

RECAP: Asian markets mostly rose again yesterday on optimism about the impact of China reopening on regional corporate performance, while the dollar remained under pressure after data showed a further slowdown in US inflation.

The SET Index moved in a range of 1,695.99 and 1,673.92 points this week before closing yesterday at 1,681.73, up 0.5% from the previous week, in daily turnover averaging 81.99 billion baht.

Institutional investors were net sellers of 5.76 billion baht, followed by retail investors at 5.68 billion, Foreign investors were net buyers of 9.96 billion baht worth of shares, followed by brokers at 1.46 billion.

NEWSMAKERS: US inflation slowed to 6.5% in December, the sixth straight monthly deceleration since a mid-2022 peak, leading some forecasters to predict the Fed could opt for a rate hike as small as 25 basis points when it meets on Feb 1.

• China's exports shrank 9.9% year-on-year in December as global demand cooled, while imports tumbled as surging Covid infections and a property downturn weighed heavily on domestic demand.
• Chinese consumer inflation accelerated in December, driven by rising food prices, though at 1.8% it is still below the government target of 3%.
• Indonesia and Tesla are continuing talks, a senior minister said on Thursday, following a report that the US electric vehicle maker is nearing a deal to build a plant with a capacity of one million units in the country.
• Singapore-based Olam Group, one of the world's largest commodity traders, plans to list its agribusiness arm Olam Agri Holdings on the city-state's bourse and also in Saudi Arabia, in the first half of this year.
• India, the world's biggest rice exporter, is considering lifting restrictions on shipments in a move that would mark a further easing of a global wave of food protectionism after Russia's invasion of Ukraine.
• Airlines in the Asia Pacific region flew 13.4 million passengers internationally in November, compared with just 1.8 million in the same month a year earlier. The load factor of 77.4% was close to pre-pandemic levels, the Association of Asia Pacific Airlines said.
• Foreign investors sold a record 10.8 trillion yen ($83 billion) more in Japanese government bonds than they bought in 2022, Ministry of Finance data showed on Thursday, underscoring their role in driving the recent upward pressure on yields.
• The Indian software services giant Infosys has reported quarterly profit that beat estimates and lifted its revenue growth forecast to about 16% for the financial year to March, helped by a strong deal pipeline. New deal signings in the quarter reached $3.3 billion, the strongest in eight quarters.
• The Bank of Korea yesterday raised its policy interest rate by 25 basis points to 3.50%, the highest since late 2008, which analysts expect will mark the end of a tightening cycle that began in 2021.
• Taiwan Semiconductor Manufacturing Co (TSMC) said on Thursday it is considering building a second plant in Japan and is evaluating the possibility of a first in Europe, even as it estimates its revenue will fall in the first half of this year but rebound in the second half.
• The Uniqlo parent Fast Retailing said net profit in the quarter to Dec 31 fell 9.1% to 85 billion yen ($646 million), but it noted that sales in China have jumped by "double digits" this month after the government removed strict Covid restrictions.
• The boards of the telecom operators True Corporation and Total Access Communication (DTAC) have agreed to call their merged company True Corp. A joint shareholders' meeting will be held on Feb 23 to approve the new corporate structure.
• The energy conglomerate Bangchak Corporation Plc on Thursday confirmed plans to acquire a controlling 65.99% stake in Esso Thailand from ExxonMobil Asia Holdings for 55.5 billion baht. The acquisition, which includes a 174,000-barrel-per-day refinery and 700 service stations, will give BCP the country's largest service station network.
• Thailand's public debt-to-GDP ratio has risen to 61.4%, above an earlier estimate of 60.4%, after the inclusion of the Finance Ministry's guarantee of 110 billion baht in borrowing by the Oil Fuel Fund for fuel subsidies.
• The World Bank forecasts Thailand's GDP will grow this year by 3.6%, compared with global expansion of just 1.7%. Fund inflows are likely to continue, further strengthening the baht. The currency has gained 13% since Oct 21 when it bottomed out at 38.41 to the dollar, and was trading at 33.1 yesterday.
• The country's international reserves were $217 billion in December, rising for a third consecutive month from a bottom of $199 billion in September The main driver is tourism, which is expected to grow further now that China has reopened.
• The Tourism Authority of Thailand (TAT) expects between 100,000 and 300,000 tourists from China in the first quarter as travel gathers momentum, and 5 million for all 2023. It predicts 25 million foreign arrivals in total, or 60% of the 2019 level.
• The Tourism and Sports Ministry is preparing to collect a 300-baht tourism fee from all foreign passport holders visiting Thailand by June, while expats can ask for a refund at a later date. The proposal had been postponed several times last year.
• Inflation in Thailand is believed to have peaked, after figures for December showed a lower than expected gain of 5.9% year-on-year, slowing further from the peak of 7.9% in August and down 0.06% from the previous month. The CPI is projected to slow to 2.7% by March.
• Ek-Chai Distribution System Co, the operator of Lotus's retail stores, is raising its investment budget by 50% to 11 billion baht to expand as the retail market shows positive factors.
• Thai exports in 2022 are estimated to have grown by between 6% and 6.5%, missing the target of 7-8%, as global demand slowed in the final quarter, the Thai National Shippers' Council said. It estimated shipments in December alone declined by 7.5% year-on-year.
• The cabinet has approved a budget of 3.35 trillion baht for the 2024 fiscal year, which is 5.2% or 165 billion baht higher than this year. In fiscal 2023, the expenditure budget is 3.18 trillion baht, with a deficit of 695 billion.
• The Bank of Thailand plans to grant up to three virtual banking licences next year, and will allow both financial institutions and non-financial firms to apply.
• The SET-listed developer Land & Houses plans to invest 9 billion baht this year, with one-third going to three hotels, as the economy and tourism sector are recovering.

COMING UP: China will report fourth-quarter GDP and December industrial production on Tuesday. Due the same day is the ZEW economic confidence index for the euro zone. Euro zone December inflation and US producer prices will be released on Wednesday. Domestically, the Federation of Thai Industries (FTI) will release its Industrial Confidence Index.

STOCKS TO WATCH: Asia Plus Securities recommends three investment themes: domestic consumption with recommended stocks including STEC, COM7 and GULF; China plays led by AOT; and dividend plays including AP and ASK.

• Capital Nomura Securities recommends stocks that benefit from China reopening, among them AOT, AMATA, AWC, AAV, ERW, BAFS, CENTEL, MINT, SNNP, WHA, SCGP, SPA, EKH, MC, NER, AU, ANAN, ORI, AP, SIRI and SISB. Recommended petrochemical stocks are PTTGC, IRPC and SCGP.

TECHNICAL VIEW: Finansia Syrus Securities sees support at 1,680 points and resistance at 1,710. Capital Nomura sees support at 1,677 and resistance at 1,701.