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Bangkok Post
Bangkok Post
Business

Rough week for equities as central banks talk tough

RECAP: Asian stocks slumped in line with global equity markets, which have seen their worst week this year, as a string of hawkish central bank surprises made investors nervous about the economic cost of taming inflation.

Thai shares declined on a lack of new drivers while China's sluggish recovery pressured sentiment. The SET Index moved in a range of 1,495.82 and 1,562.36 points this week before closing yesterday at 1,505.52, down 3.6% from the previous week, in daily turnover averaging 37.88 billion baht.

Retail investors were net buyers of 6.42 billion baht, followed by brokers at 1.84 billion. Foreign investors were net sellers of 4.32 billion baht, followed by institutions at 3.94 billion.

NEWSMAKERS: Federal Reserve chairman Jerome Powell said that returning inflation to 2% is crucial to support the long-term health of the US economy. Consequently, two more interest-rate increases will probably be needed this year, he told the Senate Banking Committee.

  • China's central bank cut key lending rates on Tuesday in a widely expected move to spur investment and consumption as the post-pandemic recovery is stalling.
  • The Bank of England rattled markets by raising interest rates by 50 basis points -- twice the amount expected -- on Thursday, after it said there had been "significant" news suggesting inflation would take longer to fall.
  • Indonesia's central bank left its policy rate unchanged at 5.75% on Thursday, as expected, as inflation last month returned to within its target range.
  • Global investors bought a net 641 billion yen ($4.5 billion) in Japanese equities in the week to June 16, bringing the year-to-date total to 6 trillion yen, the best performance since 2003.
  • China has announced another 520 billion yuan ($72 billion) worth of tax breaks over four years for electric vehicles and other green cars, in a move to boost slow auto sales growth.
  • Japanese core consumer prices in May rose 3.2% from a year earlier, staying above the central bank's 2% target for the 14th straight month.
  • Carlos Ghosn vowed on Tuesday to fight "to the end" in a $1-billion lawsuit that the former Nissan chairman has brought against the Japanese carmaker. The suit alleges defamation and the fabrication of evidence against him by Nissan as well as 12 individuals and two other companies.
  • The Southeast Asian super-app Grab is cutting 1,000 jobs, or 11% of its workforce, citing the need to manage costs and ensure more affordable services long-term.
  • Alibaba Group Holding chairman and chief executive Daniel Zhang will step down as the Chinese e-commerce conglomerate struggles to spur growth amid fierce competition. Joe Tsai, currently executive vice-chairman, will succeed Mr Zhang as chairman, while Eddie Wu, chairman of the online marketplace Taobao, will become the CEO.
  • Japan Post Bank plans to invest 1 trillion yen ($7.05 billion) in startups across the country, using its nationwide postal network to identify promising businesses.
  • The US chipmaker Micron, whose products are banned in China on security grounds, plans to invest $825 million in India to build a semiconductor plant. The announcement came as Indian PM Narendra Modi was on a state visit to Washington.
  • Tesla chief executive Elon Musk said on Tuesday that he expects his electric vehicle company will invest in India "as soon as humanly possible".
  • Record plane orders by India's top two carriers show the country's huge untapped potential for air travel. The budget airline IndiGo last week announced a deal for 500 Airbus narrow-body jets. A day later, Air India firmed up an order for 470 Airbus and Boeing aircraft.
  • The publicity surrounding ChatGPT has prompted 45% of senior corporate executives to increase artificial intelligence (AI) investments, a recent Gartner poll of more than 2,500 executives has found.
  • Elon Musk's company SpaceX and Indonesia have launched a satellite from the US aimed at bringing high-speed internet to remote areas across the sprawling archipelago of 17,000 islands.
  • The Stock Exchange of Thailand plans to tighten listing rules as a major accounting scandal, debt defaults and unexplained share gyrations rattle investors, pushing the SET Index to a two-year low.
  • The Department of Special Investigation says it will investigate Stark Corp over suspicions of fraud by its former executives, which came to light after the listed wire and cable maker failed to submit financial statements in time and defaulted on bond payments.
  • The SET on Monday imposed market surveillance measures on Delta Electronics shares, citing unusual price rises. The company told the SET that the fluctuations were caused by external factors and its financial fundamentals remained robust.
  • The SET warned investors to carefully study available information before trading shares of the digital solutions provider TBN Corp, which debuted on MAI on Monday. The SET reported "high speculation and a trading turnover ratio of 85%" for TBN shares during Tuesday's morning session.
  • The formal opening of the new parliament is expected in the week of July 3 after the Election Commission endorsed all 500 MPs elected in the May 14 general election. A joint sitting of the House and the Senate is expected on July 13 to select a new prime minister.
  • The majority state-owned energy giant PTT will roughly triple its investments this year from initial plans to 93.5 billion baht. Its EV unit Horizon Plus is gearing up to produce its first vehicles in 2024, while PTT and the Chinese EV battery giant CATL are teaming up on a battery venture.
  • WHA Corp Plc, the country's largest industrial estate developer, expects a second straight year of record land sales from companies seeking to diversify away from China.
  • The contractor Nawarat Patanakarn Plc says an increase in the daily minimum wage to 450 baht could reduce its gross margin to 3-4%, from the current 5-6%.
  • Thailand has improved by three places to 30th in the 2023 World Competitiveness Ranking released on Tuesday by the International Institute for Management Development.
  • Phuket lost its bid to host the Specialised Expo 2027-28, which has been awarded to Belgrade, Serbia. Phuket had been planning its bid since 2020, seeing it as a big economic difference-maker that could attract 7 million visitors and generate income of 50 billion baht.
  • Centara Hotels & Resorts plans to open the Centara Grand Hotel Osaka on July 1, its first foray into the Japanese market. Centara has been recognised by Tripadvisor as a 2023 Travellers' Choice award winner for 31 of its hotels and resorts around the world.
  • The Export-Import (Exim) Bank of Thailand says it aims to expand green loans to 50% of its total credit outstanding within four years.
  • New foreign investment totalled 45.4 billion baht in the first five months of this year, down 18% from a year earlier, according to the Business Development Department. The top three sources were Japan with 15.9 billion baht worth of projects approved, China (11.5 billion) and Singapore (6.35 billion).
  • Thai rice exports are likely to surpass 8 million tonnes this year, driven by higher global demand as countries rush to stock up to brace for the effects of the El Nino weather phenomenon.
  • SCB X Plc is teaming up with KakaoBank of South Korea to set up a consortium to apply for a virtual bank licence from the Bank of Thailand.
  • Magnolia Quality Development Corporation (MQDC) plans to invest at least 20 billion baht to develop The Happitat, a theme destination in the 400-rai mixed-use project The Forestias, combining real and virtual experiences.

COMING UP: Germany will release an updated business sentiment survey on Monday and the US will release May durable goods orders and June consumer confidence on Tuesday. On Thursday, the US will release its final first-quarter GDP figure and the EU will announce June consumer confidence. Locally, May trade data will be announced on Wednesday.

STOCKS TO WATCH: InnovestX Securities recommends selective buys of stocks with positive drivers such as Q2 earnings that are expected to grow year-on-year and quarter-on-quarter. They include AOT, BBL, ADVANC, MINT, OSP, BDMS and BEM. Also consider firms whose performance has bottomed out, such as KCE and ONEE. Stocks expected to weather a SET downturn include AP and HMPRO.

  • Krungsri Securities recommends stocks that will benefit from government economic stimulus measures, with solid fundamentals such as ADVANC, AMATA, WHA, BBL, KBANK, TTB and SCB. Stocks that could benefit from Move Forward policies include BBL, KBANK, ADVANC, OSP, TOA and ICHI.
  • Also recommended are stocks that benefit from short-term baht depreciation, such as HANA, GFPT, CPF and SCC: AI ecosystem players such as HANA, ADVANC, INTUCH, GULF, BE8 and BBIK; and value stocks like GPSC, BGRIM, GULF, BCH and CHG.

TECHNICAL VIEW: Kasikorn Securities sees support at 1,490 points and resistance at 1,520. InnovestX Securities sees support at 1,470 and resistance at 1,525.

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