Regional shares retreat, foreign selling continues

RECAP: Asia-Pacific stocks retreated on Friday, slumping towards a second weekly loss as investors fretted about the potential for further US Federal Reserve tightening.

Thai shares consolidated as foreign fund outflows continued amid near-term headwinds including a weakening baht and rebounding bond yields. Fourth-quarter results and economists’ previews of official Thai GDP data, due on Feb 20, will be keys to monitor in the coming week.

Thai shares moved in a range of 1,656.74 and 1,689.51 points this week before closing yesterday at 1,664.57, down 1.4% from the previous week, in daily turnover averaging 58.63 billion baht.

Foreign investors were net sellers of 12.31 billion baht. Retail investors were net buyers of 10.97 billion baht, followed by brokers at 1.21 billion and local institutions at 133.48 million baht.

NEWSMAKERS: US Federal Reserve chairman Jerome Powell reiterated that the central bank has more work to do when it comes to slowing the economy, and that officials remain determined to bring rapid inflation under control, even if that means pushing interest rates higher than expected.

• The number of Americans filing new claims for unemployment benefits increased more than expected last week, but the underlying trend still points to a tight labour market. The four-week moving average, considered a better measure of market trends, fell to 189,250 claims, the lowest since April last year.
• China said yesterday it would “actively consider” resuming visa services for South Korean nationals, after Seoul said it would resume issuing tourist visas to Chinese nationals as Covid risk has eased.
• The International Civil Aviation Organization (ICAO) forecast on Wednesday that global air passenger demand would reach pre-Covid levels for most routes by the first quarter of this year and will grow 3% from 2019 levels by the end of this year.
• The US internet giant Yahoo on Thursday announced plans to lay off more than 20% of its workforce and will focus more on Taboola, the online advertising company in which it is increasing its stake to 25%.
• The selloff in Adani shares worsened as MSCI cut the amount of shares it considers freely tradable for four of the Indian conglomerate’s companies. Companies controlled by Asia’s richest man have lost up to half their value since a US short-seller accused the group of “massive fraud” on Jan 24.
• Honda Motor Co yesterday posted a better-than-expected 22% rise in third-quarter operating profit, as a weaker yen helped offset rising raw material costs and lower vehicle production and sales amid chip supply shortages.
• Walt Disney Co announced plans for a dramatic restructuring of the world’s largest entertainment company, including 7,000 job cuts and $5.5 billion in cost savings. The reductions include plans to cut $3 billion from its budget for movies and TV shows.
• Trade in goods between the US and China climbed to a record $690.6 billion in 2022, a reminder that consumers and companies in the world’s two biggest economies remain deeply connected even as their governments squabble. The US trade deficit with China was $382.9 billion.
• Overseas investors were net sellers of nearly 4 trillion yen (US$30.5 billion) in medium- to long-term Japanese government bonds between Jan 8 and 14 even the Bank of Japan held its yield cap steady, as many consider a shift to tighter monetary policy inevitable, analysts say.
• Malaysia’s economy outperformed expectations in the fourth quarter, with 7% year-on-year growth, partly thanks to strong domestic demand, and the central bank said it expected the country to avoid a recession.
• Inflation in the Philippines reached a 14-year high of 8.7% in January, driven by rising utility, housing and food costs. The headline rate has climbed steadily from 3.0% at the start of last year.
• Thailand’s consumer confidence index rose to a 26-month high January, driven by the economic recovery, a surge in foreign tourist arrivals and the easing of the pandemic. The University of the Thai Chamber of Commerce (UTCC) said the index increased for an eighth straight month to 51.7, from 49.7 in December.
• Flag carrier Thai Airways expects to conclude its restructuring plan ahead of schedule as worldwide travel demand is recovering quickly. The restructuring plan is 70% complete, according to new CEO Chai Eamsiri, who took the post on Feb 1.
• Kasikorn Investure Co Ltd, a subsidiary of Kasikornbank, has acquired a 9.9% stake in J Asset Management (JAM), worth 3.5 billion baht. KBank teamed up with JAM last year to set up JK Asset Management Company (JK AMC), the first joint venture between a commercial bank and an asset manager formed specifically to address soaring non-performing loans linked to the pandemic.
• AP Thailand (AP) plans to launch 58 new property projects this year worth a combined 77 billion baht, the highest in the industry, with a target of 58 billion baht in presales and 57.5 billion baht in revenue. The majority of the launches remain in the low-rise house category as strong demand is expected.
• WHA Utilities and Power, a unit of WHA Corp (WHA), the country’s biggest industrial land developer and operator, aims to achieve a revenue target of 2.7 billion baht within five years, driven by its growing water and energy businesses in Thailand and Vietnam.
• The cabinet approved more tax incentives for foreign film shoots. The rebate scheme has been upgraded to 20% for every 100 million baht spent on a shoot, with an additional 10% rebate offered to productions that hire Thai staff, promote Thai culture and shoot in second-tier tourism provinces.
• PTT Exploration and Production (PTTEP) expects its sales of oil and gas this year to reach a new high of 470,000 barrels of oil equivalent per day (KBOED), driven by gas supply from the Erawan field in the Gulf of Thailand. Sales reached 468 KBOED last year.
• SCG Ceramics Plc (COTTO) and Huawei Technologies have teamed up to develop energy storage technology, aiming to serve factory operators that adopt renewable energy.
• Grande Asset Hotels and Property aims to record 6 billion baht in revenue this year, more than triple the total posted last year, as the hotel business has bounced back to the pre-pandemic level. Half of the company’s revenue target would be generated by five hotels in Bangkok and Hua Hin.
• The consumer price index (CPI) rose 5% year-on-year in January, a nine-month low and down from 5.9% in December, due to the deceleration in energy and food prices. The government expects the inflation rate to fall steadily throughout this year.
• Kasikornbank plans to expand its digital lending this year with stronger control of loan quality, while also adding more mobile banking users. The K-Plus app now averages 1.5 million loan applications per month.
• Central Retail Corporation, the country’s biggest mall operator, plans to invest 28 billion baht to expand in Thailand and Vietnam this year.
• Chinese travel agencies resumed outbound group tours to 20 countries including Thailand on Feb 8, following the relaxation of rules by Beijing. Flights from China are expected to total 36,896 this year, up 227% year-on-year. Chinese tourist arrivals inn Thailand are on course to hit pre-Covid-19 levels by year-end.
• PTT Oil and Retail Business is developing its non-oil business by opening a drive-through service for Ohkajhu, an organic salad restaurant in which it holds 20%, at a petrol station in Nonthaburi.

COMING UP: Revised fourth-quarter GDP figures for the euro zone are due on Tuesday, along with US inflation data, followed by US January retail sales on Wednesday. Locally, reporting of fourth-quarter results continues until Feb 28, and the National Economic and Social Development Council will announce fourth-quarter 2022 GDP on Friday.

STOCKS TO WATCH: Asia Plus Securities says a host of both positive and negative factors are creating market volatility. It groups potential outperformere into three themes: Election plays including ADVANC, BBL, PLANB and PYLON; China plays such as CENTEL and NER; and growth stocks, with SAPPE recommended.

• SCB Securities recommends laggard stocks that are expected to show better profits in 2023: CPF, GPSC, SCGP and HMPRO. For election plays,it recommends BEC, CENTLE, CPN and MAJOR. Firms expected to deliver strong Q4 2022 and Q1 2023 results are MINT, CRC, and CPALL.

TECHNICAL VIEW: Asia Plus Securities sees support at 1,650 points and resistance at 1,700. SCB Securities sees support at 1,656 and resistance at 1,690.