Equities revive on optimism about China reopening

RECAP: Global equities trimmed their losses yesterday as Chinese shares surged amid signs that authorities are trying harder to ease the severe economic impact of the zero-Covid policy. The MSCI index of Asian shares headed for its biggest weekly jump since July.

Thai shares withstood a week of volatility with the SET remaining above 1,600 points, supported by optimistic reports out of China. However, the continuing pace of aggressive interest rate hikes by major central banks capped gains.

The SET Index moved in a range of 1,605.76 and 1,635.93 points this week before closing yesterday at 1,626.32, up 1.26% from the previous week, in daily turnover averaging 62.23 billion baht.

Retail investors were net sellers of 11.15 billion baht followed by institutions at 4.2 billion. Foreign investors were net buyers of 13.36 billion and brokers bought 2 billion baht worth of Thai shares.

NEWSMAKERS: Thai listed companies representing one-quarter of SET market capitalisation have reported third-quarter earnings results so far. The figures show that aggregate net profit is down 3.3% from the previous quarter but up by a healthy 36.2% year-on year.

• The index of mainland Chinese companies trading on the Hong Kong Stock Exchange has risen 6.4% this week, while the CSI 300 in Shanghai and Shenzhen has risen more than 4% amid unconfirmed reports that authorities plan to open up the country in March.
• The Covid lockdown of Foxconn's Zhengzhou factory, the world's biggest maker of iPhones, has highlighted the risks manufacturers face in zero-Covid China, analysts say. The Taiwanese contract manufacturer Pegatron Corp, meanwhile, has begun assembling the iPhone 14 in India, Bloomberg reported on Friday.
• The US Federal Reserve on Wednesday delivered its fourth straight interest rate increase of 75 basis points, with chairman Jerome Powell warning it would be "premature" to ease up in the aggressive campaign to bring down inflation. The hike brings the central bank's benchmark lending rate to a range of 3.75% to 4%, the highest since January 2008.
• The Bank of England raised its key rate by 75 basis points, the biggest one-time move since 1989, saying that Britain had already entered a recession that could last two years. Governor Andrew Bailey said the turmoil in the UK, where inflation is close to 11%, is worse in economic terms than what it experienced in the 1970s.
• The Reserve Bank of Australia on Tuesday raised its interest rate by 25 basis points for a second straight month to a nine-year peak of 2.85%, saying more tightening will be needed ahead. Inflation is expected to peak around 8% later this year, its said.
• Malaysia's central bank on Thursday raised its benchmark rate for the fourth straight meeting, by 25 basis points to 2.75%, to keep inflation under control.
• The Hong Kong Monetary Authority on Thursday raised its base rate by 75 basis points to 4.25%. The move prompted HSBC to lift its prime lending rate to 5.375%.
• Asia Plus Securities says Thailand does not need to raise interest rates as rapidly as developed countries, so foreigners have been net buyers on the SET for 10 days in a row.
• European stock markets this week posted their worst losses in four weeks, with interest-rate-sensitive stocks such as tech and real estate falling 2.3% and 2.9%, respectively.
• Hackers inflicted more pain on the cryptocurrency sector by looting $28 million from the derivatives exchange Deribit in what is shaping up to be a record year for thefts of virtual assets. More than $3 billion has been hacked so far in 2022, according to blockchain specialist Chainalysis.
• Investors are growing more nervous about Vietnam's property market, noting that developers have $15 billion in bonds due by 2025.
• The Tourism Authority of Thailand hopes to welcome at least 1 million tourists from the US next year through partnerships with Delta Air Lines and Korean Air to bring travellers from 17 gateway cities, as Thai Airways does not offer direct flights from the US.
• The National Economic and Social Development Council (NESDC) has rejected the 5G business plan of state-owned National Telecom, saying it is financially unfeasible.
• Central Retail Corp (CRC), the country's biggest mall operator, is upbeat about the high season as consumer purchasing power rebounds and foreign traveller numbers are rising rapidly. Government stimulus measures such as the "Shop Dee Mee Khuen" tax rebate should boost fourth-quarter spending, executives said.
• The Excise Department is considering a subsidy to support the production of electric vehicle (EV) batteries, aiming to reduce the price of EVs to make them more competitive with fossil fuel-powered vehicles. Batteries now account for around 50% of an EV's total price.
• Jay Mart, the retail IT, finance and technology conglomerate, aims to achieve annual net profit growth of 50% over the next three years, with a 500 billion baht market capitalisation by 2024, up from 200 billion now.
• Tourism leaders are projecting 18 million foreign arrivals in 2023, says the TAT. Around 13 million would come from short-haul markets, contributing around 62% of the overall revenue target of 971 billion baht.
• The cabinet on Tuesday approved new ministerial regulations for the production of liquor and craft beer, pre-empting a more progressive bill proposed by the Move Forward Party as a way to end the current oligopoly. The bill was defeated the following day in the House by two votes.
• Thai exports are expected to grow by 2-5% next year, easing from an expected 8% increase in 2022, as global economic conditions are expected t be weaker next year, says Chaichan Chareonsuk, president of the Thai National Shippers' Council.
• United Overseas Bank (Thai) has set an ambitious goal to double its retail customer base now that it has completed its takeover of Citigroup's consumer banking businesses, bringing its retail customer total to 2.4 million.
• Government measures to allow selected foreigners to buy a landed house will double the value of residential transfers to foreign buyers to 100 billion baht per year, the Real Estate Information Center (REIC) predicts.
• Egat International, a subsidiary of Ratch Group Plc, has teamed up with US-based Evlomo Technologies to invest $100 million in EV charging and energy storage solutions in the US market next year.
• Thailand's digital GDP reached 2 trillion baht in 2021 after posting year-on-year growth of 14.1%, according to the National Digital Economy and Society Commission (ONDE).
• The embattled cryptocurrency exchange Zipmex said it was in advanced talks to receive a financial lifeline from one of its investors. Sources said the investor was the venture capital fund V Ventures, a subsidiary of the SET-listed shipping firm Thoresen Thai Agencies Plc.

COMING UP: China will release October trade figures on Monday, followed by October consumer and producer prices on Wednesday. The US on Wednesday will release October inflation and weekly unemployment and oil market updates.

STOCKS TO WATCH: Asia Plus Securities expects foreign fund flows to continue supporting Thai stocks for the remainder of the year. It recommends domestic and consumption-focussed stocks of firms that see less impact from global factors, among them CBG, CRC, CK, BBL, PLANB, GULF and SCGP.

• Tisco Securities recommendeds that investors focus on domestic stocks expected to see profit growth in both the third and fourth quarters. It recommends AU, BAM, BDMS, CPALL and SCB.

TECHNICAL VIEW: Tisco sees support at 1,580 points and resistance at 1,650. Thanachart Securities sees support at 1,612 points and resistance at 1,650.