Equities move lower but SET outlook still good

RECAP: Asian and European stocks moved lower yesterday, as US Treasury yields held at the highest level since the global financial crisis of 2008 and investors weighed risks to Chinese markets.

Thai shares moved up this week, and Finansia Securities has a bullish view on the local market. Thailand's economic recovery, the broker says, should help the SET index outperform peers. In the short run, the focus will be on banks' third-quarter earnings and real sector earnings previews.

The SET Index moved in a range of 1,553.80 and 1,597.93 points this week before closing yesterday at 1,591.32, up 2% from the previous week, in daily turnover averaging 55.9 billion baht.

Retail investors were net sellers of 4.92 billion baht. Institutions were net buyers of 4.12 billion, foreign investors bought 530 million and brokers bought 269.11 million baht worth of shares.

NEWSMAKERS: US Treasuries have entered the longest sustained slump in 38 years, as policy makers signal their determination to keep raising interest rates until they are sure inflation is under control. The yield on benchmark 10-year notes jumped 23 basis points this week to 4.26% on Friday.

• The Chinese yuan resumed its weakening trend yesterday, approaching lows hit during the global financial crisis of 2008. The Vietnamese dong also fell to a record low as other emerging Asian currencies remained on the back foot against a resilient dollar.
• Chinese President Xi Jinping is poised to win a precedent-breaking third five-year term as General Secretary of the ruling Communist Party when the 20th Party Congress wraps up this weekend.
• The London stock market and the pound bounced on Thursday after British Prime Minister Liz Truss announced her resignation after weeks of market anxiety about a disastrous economic plan. Uncertainty remains, however, about whether the Conservative Party can survive in power once if selects a new leader next week.
• UK inflation accelerated to 10.1% in September, piling more cost-of-living misery on households.
• Core consumer inflation in Japan rose to a fresh eight-year high of 3.0% in September, exceeding the central bank's 2% target for the sixth straight month as the yen passed 150 to the dollar, a 32-year low, and pushing up import costs.
• The Japanese Trade Union Confederation says it will seek the biggest pay raise for union members in nearly three decades, as the country feels the bite of inflation.
• Hedge funds focussed on emerging Asia posted their biggest monthly losses in years in September, at 7.7%, and are set for the worst year since the 2008 financial crisis, the data provider HFR said.
• Indonesia's central bank raised its benchmark interest rate by 50 basis points for a second straight meeting, as authorities sought to arrest a slump in the rupiah and check inflation.
• The global smartphone market had its worst third quarter since 2014, with shipments falling 9% year-on-year, as economic headwinds pushed consumers to delay discretionary purchases like personal electronics.
• Thailand's telecom regulator declined on Thursday to halt a merger that will create the country's largest network operator. After an 11-hour meeting, the National Broadcasting and Telecommunications Commission (NBTC) board voted 3-2 to "acknowledge" the merger of True Corp and Total Access Communications (DTAC) into a new company that will command 54% of the mobile market. It will be subject to a number of conditions to protect consumers.
• The global economy will grow at 3.2% this year, a substantial drop from 6% last year, with an even gloomier outlook for next year, Finance Minister Arkhom Termpittayapaisith said at an Apec finance ministers' meeting on Thursday.
• Cooking gas prices will remain unchanged until the end of this year, even though world prices for liquefied petroleum gas (LPG) have fallen by 11% in the past month, as authorities seek to shore up the heavily indebted Oil Fuel Fund. The retail price of cooking gas will stay at 408 baht per 15kg cylinder.
• The new phase of the domestic tourism subsidy programme is expected to cover between 3 million and 4 million hotel rooms, double the number in the fourth phase that ends this month. The fifth phase of "We Travel Together" will continue to offer a 40% subsidy on hotel rooms to domestic tourists, along with a voucher worth 600 baht a night for food and shopping.
• The Commerce Ministry plans to ask the cabinet to approve a price guarantee scheme for palm oil farmers for the 2022-23 harvest season, while pledging to support crude palm oil exporters.
• Advanced Info Service's plan to acquire the fixed broadband provider Triple T Broadband (TTTBB) and invest 19% in Jasmine Broadband Internet Infrastructure Fund (JASIF) faces uncertainty after JASIF unitholders rejected AIS's proposed amendments to optical fibre cable rental agreements.
• SET-listed CK Power Plc (CKP), the energy arm of the contractor Ch. Karnchang Plc (CK), plans to acquire additional shares worth 21.5 billion baht in Luang Prabang Power Co, which is planning a third hydropower dam in Laos.
• The cabinet on Tuesday agreed to waive personal income tax for foreign actors for five years, which supporters say could generate as much as 3.5 billion baht in revenue from investments in foreign film productions.
• The government plans the usual array of "New Year gifts" at the end of the year, including an extension of the "Khon La Khrueng" co-payment scheme and the "Shop Dee Mee Khuen" tax rebate, to encourage consumer spending to drive economic recovery.
• Energy Absolute (EA) has launched an electric mini truck as the company continues to expand its business in the commercial EV category. The company earlier introduced an electric boat and an electric bus.

COMING UP: The Ministry of Commerce will announce Septenber trade figures on Tuesday and the Ministry of Finance will release its regional economic index. From Oct 26-29, Thailand will host the Asia-Pacific Parliamentary Forum. The Bank of Thailand Digital Finance Conference 2022 will take place from Oct 27-29.

• Elsewhere, the updated EU Business Sentiment Index will be released on Tuesday and US new home sales on Wednesday, along with weekly oil stockpile reports.

STOCKS TO WATCH: Capital Nomura Securities recommends the investment strategy for a long-term portfolio is to hold 70% in stocks, 15% in bonds, 5% in gold and 10% cash or money market funds.

• Recommended stocks are those related to domestic consumption and spending such as banks and insurance, retail and communication. The brokerage's picks include SCB, BBL, TLI, MAKRO, BJC, CRC, ICHI, BE8, BEC, ERW, SCGP and GPSC.
• Yuanta Securities recommends stocks of firms with a strong financial position with good resistance to inflationary pressures and rising interest rates, including AH, BBL, BDMS, CPALL, GULF, GFPT, III, KISS, PLANB, SC, SNNP and WHA.
• Kasikorn Securities advises investors to look at stocks that could benefit from the relaxation of Covid measures by China. They include tourism plays such as AOT, AAV, CENTEL, ERW, SPA and EKH, property developers like SIRI and ANAN, industry and logistics firms SCGP, JWD and PSL, industrial estate firms WHA and AMATA, food and beverage players TKN and SNNP, and cosmetics firms including DDD and BEAUTY.

TECHNICAL VIEW: Thanachart Securities sees support at 1,580 points and resistance at 1,610. Capital Nomura Securities sees support at 1,576 points and resistance at 1,609.