Equities soar as US inflation shows signs of easing

RECAP: Asian shares jumped yesterday as slowing US inflation and an easing of some Chinese Covid quarantine rules triggered a relief rally. The MSCI Asia Pacific Index climbed as much as 3.5%, on track for its best weekly gain since April 2020.

Thai stocks rode the bullish trend with the SET Index testing 1,640 points. With US bond yields down by about 30 basis points from the previous day, fund inflows into all assets were brisk.

So far, the third-quarter earnings season locally has been in line with expectations. Reopening and domestic plays with a medium- to high-end customer base are still healthy. SET president Pakorn Peetathawatchai is optimistic that Thai listed firms, especially economic recovery-related businesses as well as the tourism industry, will attract foreign funds to continue flowing into the market for the rest of the year.

The SET Index moved in a range of 1,611.17 and 1,640.03 points this week before closing yesterday at 1,637.29, an increase of 0.68% from the previous week, in daily turnover averaging 74.71 billion baht for five operating days.

Retail investors were net buyers of 4.66 billion baht, followed by foreign investors at 8.75 billion. Institutions were net sellers of 7.32 billion baht and brokers sold 6.09 billion baht worth of shares.

NEWSMAKERS: US consumer prices rose 7.7% year-on-year in October, down from 8.2% in September, triggering a huge rally on Wall Street on Thursday as investors believe the Federal Reserve may ease its aggressive approach to raising interest rates to tackle inflation.

• US employment data in October beat estimates, but the unemployment rate also ticked up to 3.7% from 3.5%, another indicator that could prompt the Fed to opt for a smaller rate hike when it meets in mid-December.
• Gold prices were on track for their biggest weekly gain in more than eight months, flirting with $1,750 an ounce after the release of improved US inflation data pushed down the dollar.
• China has reduced the amount of time travellers and close contacts must spend in quarantine, and pulled back on testing, in a significant easing of a zero-Covid policy that has led to widespread public discontent.
• The cryptocurrency market is in turmoil again, this time from the implosion of FTX, the world's second-largest crypto exchange. Larger rival Binance walked away from a bailout deal after taking a closer look at the numbers. US securities regulators are now investigating FTX founder Sam Bankman-Fried.
• Facebook parent Meta Platforms is laying off off 11,000 workers, or 23% of its workforce. "I got this wrong," chief executive Mark Zuckerberg said of his aggressive bet that the growth rate of online activity seen during the pandemic would continue.
• Elon Musk's chaotic reign as the owner of Twitter continued, with the billionaire telling employees that bankruptcy was a possibility if the company doesn't start generating more cash. More key executives in charge of security quit, drawing warnings from US regulators.
• Indonesia's largest internet company, GoTo Group, is planning to cut more than 1,000 jobs or 10% of its workforce as it seeks to trim costs and shore up its finances.
• The Thai government has withdrawn a widely criticised proposal to sell small plots of residential land to four groups of foreign investors, with Interior Minister Anupong Paojinda conceding it was a "sensitive issue" that needed more study.
• Roughly 154 billion baht in foreign capital has flowed into the local stock market since the beginning of the year, as foreign investors view the SET as a safe haven among global peers, said SET president Pakorn Peetathawatchai.
• Consumer confidence increased for the fifth straight month in October, hitting a 10-month high, boosted by strong exports, a recovery in tourism and the easing of the pandemic, the University of the Thai Chamber of Commerce (UTCC) reported.
• The Industrial Estate Authority of Thailand aims to sell and lease 2,500 rai of land in fiscal 2023 as it takes advantage of the relocation of production facilities to Thailand. Its land sales rose 65% year-on-year to 2,016 rai in fiscal 2022 that ended on Sept 30.
• Land and Houses Bank is upgrading and plans to rebrand its existing mobile banking application to offer a full range of services, including a buy now, pay later service.
• Planet Communication Asia, a digital tech service provider, has joined hands with the global tech giant Cisco Systems to develop a prototype mobile data centre to facilitate the development of smart cities.
• The Thai economy likely faces a new slowdown as a global recession is expected next year, says the Federation of Thai Industries. It has advised the government to continue supporting the economy, even though the Thailand Industry Sentiment Index increased in October for the fifth month to 93.1 points, from 91.8 in September.
• About 18.5 billion baht will be spent in Thailand during the 32-day World Cup period from Nov 20 to Dec 18, the University of the Thai Chamber of Commerce estimates. That's a 3.7% increase over the amount spent during World Cup 2018, it said.
• The retail operator Big C Supercenter Plc plans to overhaul the image of its stores and enhance its digital ecosystem over the next 18 months to strengthen its offerings to fit customers' changing lifestyles.
• Work on the Thai-Chinese high-speed railway continues at a snail's pace, with construction of the first phase between Bangkok and Nakhon Ratchasima only 15% completed, against a target of 37%, authorities concede. They say some details of the contract may need to be renegotiated.
• Bangkok Dusit Medical Services, the country's biggest hospital operator, plans to further develop specialised care for cancer patients to an international level by joining with Japan's National Cancer Center.
• Gulf Energy Development, the country's biggest private power producer by market value, is pushing to acquire a 41.1% stake in the satellite service provider Thaicom Plc for 10.8 billion baht as it explores new business opportunities in the space economy.
• Thai inflation in November and December is expected to decelerate further, following a decrease in the prices of several essential consumer goods and stable prices of some items despite higher costs, forecasters say.
• Spending on public cloud computing services in Thailand is expected to surge 31.8% to 54.4 billion baht in 2023, above the predicted global growth rate of 20.7%, according to the research firm Gartner.
• Tisco Bank expects total loan growth for 2022 to exceed its 5% full-year target after booking credit expansion of 5% for the first nine months amid economic recovery. The bank believes it can now reach 6-7% expansion.
• City Hall has informed the Interior Ministry of its objections to the latter's proposal to renew the concession for the Green Line railway extensions with SET-listed operator BTS.
• Bangkok Bank says it plans to maintain the loan proportion of its international banking business at the existing level of 24-25% of total loans for the next few years.
• The residential market could contract by 10% next year once the availability of 100% loan-to-value (LTV) mortgages is scrapped on Dec 31, says the SET-listed developer Supalai Plc.

COMING UP: Locally, Thailand hosts the Asia-Pacific Economic Cooperation (Apec) meeting on Nov 18 and 19. On Nov 21, the National Economic and Social Development Council releases official third-quarter GDP. Updated trade figures are due on Nov 25.

• Elsewhere, China will release October manufacturing and retail sales data on Tuesday. Due on Wednesday are euro zone third-quarter GDP and ZEW economic confidence, US producer prices and UK inflation.

STOCKS TO WATCH: Asia Plus Securities recommends accumulating stocks expected to benefit from World Cup-related spending in what is already the high season for domestic consumption stocks. Top plays in retail include BJC, CPALL, MAKRO, HMPRO and CRC. Food sector picks are MINT, CENTEL and TKN, and media picks are BEC, ONEE and RS.

• Capital Nomura Securities recommend stocks that will benefit from baht appreciation, especially power producers and other so-called anti-commodity plays, among them SCGP, GPSC, TOA, EPG, GULF and SAPPE. Other picks are BE8, BBIK, IIG, JMT, JMART, CRC, CPALL, MAKRO, BJC, ICHI, SNNP, ERW, CENTEL, SISB, TLI and SINGER.

TECHNICAL VIEW: Kasikorn Securities sees support at 1,600 points and resistance at 1,650. Asia Plus Securities sees support at 1,613 and resistance at 1,650.