Emerging markets fret over Covid, China crackdown


Recap: Emerging markets remained under pressure yesterday from the worsening pandemic and China’s regulatory crackdown. Equity futures in Europe and the US were steady ahead of US payrolls data, after solid earnings pushed shares to record highs.

The SET index moved in a range of 1,513.71 and 1,548.63 points this week before closing yesterday at 1,521.72 points, down marginally from the previous week, in daily turnover averaging 73.39 billion baht.

Retail investors were net buyers of 4.24 billion baht, institutional investors bought 3.9 billion and brokerage firms purchased 12.84 million baht worth of shares. Foreign investors were net sellers of 8.15 billion baht.

Newsmakers: A political standoff is brewing in the US Senate over the government’s debt limit that risks throwing markets into chaos. The borrowing limit was reached on Aug 1 and Treasury Secretary Janet Yellen warned the Treasury could run out of cash in September.

  • Europe’s largest banks are strong enough to withstand another severe economic shock even after the challenges of the pandemic, results of a stress test show. The results pave the way for many banks to pay dividends.
  • Investor jitters over which sectors Chinese regulators might target next spread to the spirits and e-cigarette industries after state media ran reports about the dangers of their products. That followed a rout in tech shares including Tencent after a state-owned newspaper called online gaming “opium for the mind”.
  • Fresh outbreaks of the Delta coronavirus variant in Southeast Asia have crippled its factory sector, disrupting global supplies of goods such as rubber gloves, semiconductors and SUVs and threatening the US$3-trillion region’s recovery.
  • With executives from the Detroit automakers watching, President Joe Biden on Thursday announced a target for half of all cars sold in the United States to be zero-emission vehicles by 2030.
  • Toyota said Wednesday that net profit jumped 460% in the first quarter, boosted by strong sales fuelled by the recovery from the coronavirus crisis.
  • Shares of the online marketplace PT Bukalapak.com surged on their first day of trading after raising $1.5 billion in Indonesia’s biggest-ever IPO.
  • Ethereum, the second-largest blockchain network, has completed a major software upgrade that is expected to stabilise fees and reduce supply of the ether token. That has helped push ether prices to a two-month high. They have gained 280% since Jan 1.
  • More than 95 billion baht in capital flowed out of the Thai stock market in the first seven months of the year, partly due to the worsening pandemic and sputtering attempts to revive tourism.
  • The Revenue Department took in 1.31 trillion baht in taxes during the first nine months of fiscal 2021 to June 30, 9% short of its nine-month target, reflecting the impact of the pandemic.
  • The Bank of Thailand has slashed its economic growth projection for this year again to 0.7% as the third Covid wave has had a more severe impact. The central bank held its key interest rate at 0.5% but two dissenting members said the rate should be lowered even further.
  • The pandemic drove the country’s official unemployment rate up to 1.96% in the first quarter, the highest in five years.
  • Consumer and business sentiment continued to plunge in July based on rising Covid-19 infections and deaths, as well as a poor economic outlook.
  • The Export-Import Bank of Thailand is poised to extend the two-month debt relief period that began last month for its customers until the end of the year, said president Rak Vorrakitpokatorn.
  • The cabinet approved an additional 30 billion baht to help workers and entrepreneurs in another 16 provinces that were declared “dark red” zones, bringing to 29 the total number of provinces subjected to lockdown and curfew measures.
  • The pandemic has failed to sour Thailand’s fresh fruit exports this year, with new figures showing a 42.2% rise in the first half, driven by robust Chinese demand.
  • The value of Thai exports could fall by as much as 300 billion baht between August and December if the number of factories hit by Covid-19 doubles, says the Thai National Shippers Council.
  • While the outbreak has raised fresh concerns over a labour shortage, the Federation of Thai Industries (FTI) expects less than 30% of production may be affected.
  • Thailand saw its fuel consumption decline by 1.7% to an average of 136 million litres per day during the first half of this year.
  • International tourist arrivals may be as low as 500,000 for the full year as the country’s third-quarter prospects remain gloomy, according to the Tourism and Sports Ministry. The number of visitors to Phuket in July was just 1% of pre-pandemic levels.
  • The 7+7 sandbox island extension for travel in areas adjacent to Phuket is still scheduled to launch this month, with registration for certificates of entry for inoculated tourists to start Aug 15.
  • Thai AirAsia (TAA) has suspended all flights this month and deferred paying its staff either wholly or partially until September.
  • Ananda Development plans to appeal a Central Administrative Court ruling, which revoked the construction permit for its 80%-sold Ashton Asoke condominium over a land access dispute.
  • Gulf Energy Development acquired a 23.32% stake in InTouch Holdings Plc through a 25-day tender offer that ended on Wednesday, becoming the largest shareholder in the tech and telecom holding firm with a 42.25% stake.

Coming up: China will announce July consumer and producer prices on Monday, and the US will release June job openings and turnover. Germany and the euro zone will announce August economic sentiment on Tuesday, Japan will report the June current account and Australia will announce July business confidence.

  • The euro zone will announce industrial production figures on Thursday, and the US will release producer price index. Euro zone trade figures will be updated on Friday, and the US will announce the July import-export price index.

Stocks to watch: Capital Nomura Securities recommends firms expected to benefit from the weak baht. Every 1-baht depreciation against the dollar will add 2-3% in profits for electronics stocks, including SVI, HANA and KCE, and 1-3% for agrifood stocks, including TU, CPF, ASIAN, NER, XO and SAPPE. Depreciation will be negative for airlines.

Finansia Syrus Securities recommends stocks with prospects for good Q2 earnings performance, including KCE, HANA, SMT, DOHOME, EPG, SONIC, LEO, EKH CHG, BCH, BDMS, NER, JWD, JR, TTA, IIG, TU, SAPPE, NSL, TACC, SC and SPALI.

Technical view: Finansia Syrus sees support at 1,500 points and resistance at 1,555. DBS Vickers Securities sees support at 1,500 and resistance at 1,550.



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