Investors cheer signs of end to US debt drama

An investor looks at a stock display board in a trading room. (File photo)

RECAP: Asian shares rose on Friday as increased hopes of a deal over the US debt ceiling and strong economic data lifted sentiment, while Japan's Nikkei index jumped to its highest level in nearly 33 years.

Thai shares drifted lower amid concern about the formation of the new government and Move Forward Party policies seen as less friendly to big business.

The SET Index moved in a range of 1,512.66 and 1,570.62 points this week, before closing on Friday at 1,514.89, down 3% from the previous week, in daily turnover averaging 52.88 billion baht.

Retail investors were net buyers of 7.99 billion baht, followed by institutional investors at 1.89 billion. Foreign investors were net sellers of 9.49 billion baht, followed by brokers at 394.36 million.

NEWSMAKERS: US House Speaker Kevin McCarthy said he believed a deal to raise or suspend the debt ceiling would be reached in time to pass the House next week, averting a potentially disastrous default on June 1.

• The US announced a "substantial" package of sanctions against Russia at the G7 summit in Japan, as leaders stepped up support for Ukraine. The UK said it would ban Russian diamonds, copper, aluminium and nickel, and sanction more players in Moscow's "military industrial complex".
• More US Federal Reserve officials are coming out in support of another interest rate increase to arrest stubbornly high inflation, dimming market hopes for a pause. The FedWatch Tool now shows a 36.7% probability of a 25-basis-point hike at the June 13-14 meeting.
• President Joe Biden has vetoed a draft bill seeking to levy punitive taxes on solar cells imported from Thailand, Malaysia, Vietnam and Cambodia. The move was expected as the US solar industry has said local manufacturers cannot supply enough panels at competitive prices.
• China's industrial production in April grew 5.6% and monthly retail sales rose 18.4% -- both lower than expected and suggesting the economy could weaken in the second half. The yuan weakened past 7 per dollar for the first time in five months.
• The Shopee parent Sea Ltd reported its second consecutive quarterly profit, signalling the Southeast Asian internet company's turnaround effort is gathering pace. Revenue rose 4.9% to $3.04 billion, a sign that online retail demand is healthy despite inflation.
• After years of losses, the Asean super-app operator Grab Holdings is predicting it will break even on an adjusted basis in the final quarter of this year. On a net income basis, it is still far from profitability, though its first-quarter loss narrowed to $244 million from $423 million a year earlier.
• Japan's first-quarter GDP expanded 0.4% from the previous quarter and 1.6% on an annualised basis, representing the first positive growth in three quarters. Real GDP for the fiscal year ended March rose 1.2% year-on-year.
• Panasonic Holdings plans a record 700 billion yen ($5.05 billion) in capital spending for the fiscal year ending March 2024, with more than half going toward increasing output of electric-vehicle (EV) batteries.
• Visitors to Japan rose to a post-pandemic high of 1.95 million in April from 1.82 million in March, benefiting from a relaxation of travel restrictions in China.
• China overtook Japan as the world's top auto exporter in the first quarter, spurred by rising EV demand and deliveries to Russia. Shipments jumped 58% from a year earlier to 1.07 million units, compared with 950,000 vehicles exported by Japan, up 6%.
• Tencent Holdings, the world's largest video game company, said first-quarter revenue outperformed expectations, growing 11% to 150 billion yuan ($21.5 billion), with robust growth in most of its key sectors.
• Argentina's central bank raised its interest rate by 600 basis points to 97% as authorities attempt to tackle chronic inflation, which was 110% in April.
• The Move Forward Party and seven allies including Pheu Thai plan to sign a memorandum of understanding on Monday to create a coalition government with a combined 313 MPs in the 500-member House.
• Move Forward has an ambitious energy agenda, saying it aims to cut electricity charges by 0.70 baht per unit, or 15%, reformulate gas price calculation, end the use of availability payment contracts for power producers, open a free market for solar rooftops and revise the Power Development Plan to support clean energy.
• Thai GDP grew 2.7% year-on-year in the first quarter, up from 1.9% in the fourth quarter, the National Economic and Social Development Council said on Monday. It forecasts world economic growth this year of 2.7%, not yet a full recovery, while global trading volume will fall 2.1% and Thai exports may also shrink.
• The expiration of eased loan-to-value (LTV) limits has had an impact on many developers. Of the 30 SET-listed developers engaged in residential business, 20 reported a year-on-year decline in revenue in the first quarter.
• The SEC has issued regulations to cover service providers who sell digital tokens (ICO portals) and related businesses to provide greater clarity.
• The Federation of Thai Industries reported the first decline in the industrial confidence index in four months in April, as manufacturing slowed down during the long Songkran holidays.
• Bangkok Bank has appointed BigC Supercenter as a banking agent, providing deposit services via cashiers in more than 1,600 branches.
• The number of flights between China and Thailand almost doubled from October to April, reaching 12,805, according to Aeronautical Radio of Thailand (Aerothai). Flights are expected to reach 46,175 this year, but that would still be 66% below 2019.
• The Ministry of Commerce said new company registrations in April reached a 10-month high, bringing the four-month total to 32,000. It forecasts a full-year figure of 75,000 to 78,000.
• Thailand wants to increase free trade agreements to cover 80% of its global trade, spanning more than 50 countries, by 2027, says the Trade Negotiations Department.

COMING UP: On Monday, the People's Bank of China will announce its interest rate decision. Due Tuesday are US and EU manufacturing PMI updates, as well as US new home sales. The UK will release April inflation on Wednesday and the US will release revised first-quarter GDP on Thursday.

• Locally, the Joint Standing Committee on Commerce meets on Tuesday. On Wednesday, the Federation of Thai Industries will release April auto production and exports.

STOCKS TO WATCH: InnovestX Securities recommends four themes. First, stocks with strong fundamentals and good expected profits in 2023-24, among them AU, BBL, BDMS, CPALL and GULF. Second, stocks expected to benefit from fund inflows after the election and from baht appreciation: BBL, KBANK and ADVANC. Third, "old economy" stocks and those with expected good Q2 performance: HMPRO, MAKRO, MINT and AP. Fourth: stocks expected to benefit from new economic policies: ADVANC, BDMS, EA and AH.

• Krungsri Capital Securities recommends tourism-related stocks as Chinese arrivals keep rising, among them AOT, AAV, ERW, CENTEL, CRC, MAKRO and ADVANC.

TECHNICAL VIEW: InnovestX Securities sees support at 1,510 points and resistance at 1,546. Kingsford Securities sees support at 1,510 and resistance at 1,540.