Equities steady as Fed calms inflation jitters

Recap: The MSCI World Index held its ground yesterday despite some modest dips in Asia, while European shares opened higher. Equity investors were heartened by Federal Reserve statements that calmed worries about inflation.

The SET index moved in a range of 1,544.71 and 1,580.43 points this week before closing yesterday at 1,574.37, up 1.44% from a week ago, in daily turnover averaging 77.39 billion baht.

Institutional investors were net buyers of 1.91 billion baht and brokerages purchased 528.45 million worth of shares. Foreign investors were net sellers of 2.4 billion and retail investors offloaded 33.85 million baht worth of shares.

Newsmakers: The United States saw its biggest surge in inflation in more than a decade last month, up 5.4% year-on-year, hitting consumers and challenging the White House and Federal Reserve narrative that the price spike will fade in the coming months.

  • US Treasury yields fell as Federal Reserve Chairman Jerome Powell reiterated in testimony to Congress that rising inflation won’t last and that the Fed would continue to provide “powerful support” to complete the economic recovery.
  • China’s economic growth slowed in the second quarter to 7.9% from the very low base of a year earlier, as consumers remained hesitant to splurge and exports were dented by disruptions.
  • Electricity generation from fossil fuels has peaked worldwide as emerging markets opt for cheaper renewable technology as part of a global shift to cleaner energy, analysis by the think-tank Carbon Tracker shows.
  • Top US Senate Democrats agreed late Tuesday on a $3.5-trillion package to implement President Joe Biden’s vast plans to fund climate initiatives, health insurance and human infrastructure programs like child care, social welfare and housing.
  • Profits at Goldman Sachs jumped amid a merger boom, while earnings at JPMorgan Chase were boosted by the impact of the recovering US economy on loan quality, according to results released Tuesday.
  • Oil prices have eased back on signs the Opec+ alliance may be ready to revive supplies soon, as the UAE and Saudi Arabia seek to end a standoff over higher production quotas for the former.
  • General Motors plans to expand its offices in southern California with the opening of a new tech campus next year, reinforcing its need for additional physical space as many companies shift more permanently to remote work.
  • Boeing Co has uncovered an additional manufacturing problem with its 787 Dreamliner, according to a person familiar with the matter, as it works with US regulators to restart deliveries of the beleaguered jet.
  • Indonesian auto sales increased 476% year-on-year to 72,720 units in June, the country’s largest automotive distributor Astra International said on Wednesday.
  • The Chinese online titans Alibaba and Tencent are looking to open up their platforms to each other, the Wall Street Journal reported. The move might pacify Beijing’s increasingly aggressive regulators but is not expected to thrill shareholders, say analysts.
  • Hong Kong customs officials said they had dismantled a money laundering syndicate that used cryptocurrency to process $155 million in illegal funds, in what they said was the first successful operation of its kind.
  • Trading volumes on crypto exchanges fell 40% in June, according to CryptoCompare, with China’s crackdown depressing activity. Binance, under scrutiny from many regulators, remained the market leader but volume fell 56% to $668 billion.
  • The World Bank has revised down its forecast for Thai economic growth this year to 2.2%, from 3.4% projected earlier, as the third Covid wave hammers the economy and tourism remains weak.
  • The Federation of Thai Industries (FTI) expects the government’s 14-day lockdown in 10 provinces to cost the economy 50-60 billion baht amid concerns over further damage if authorities fail to curb the ongoing Covid outbreak.
  • The cabinet approved 42 billion baht in financial aid for people and businesses affected by Covid lockdown measures in Greater Bangkok and the far South.
  • The Bank of Thailand is allowing a two-month debt holiday for individuals and small and medium enterprises (SMEs) suffering a direct impact from the latest Covid curbs.
  • The worsening Covid situation in Thailand has led the Tourism and Sports Ministry to reconsider the country’s reopening strategy, which had called for more areas to welcome foreign travellers by October.
  • The “Samui Plus” tourism scheme kicked off on Thursday with a grand total of nine European journalists arriving as guests of the TAT. Authorities say they are in no rush and expect to welcome 1,000 vaccinated foreign tourists in the first month.
  • Headline inflation is expected to decline and hover around the lower end of its target range of 1-3% by the end of the year, the central bank said this week.
  • The Federation of Thai Industries (FTI) is closely monitoring the baht after it fell to its weakest level in 14 months at 32.29 to the US dollar, although this benefits Thai exporters.
  • Thailand aims to clinch deals to form deeper trade partnerships through “mini-FTAs” with Hainan, China and Telangana, India by August.
  • A draft royal decree meant to regulate digital platforms has drawn criticism from legal and tech experts who say some of its stringent requirements are impractical. One proposal says foreign platforms serving Thailand must have representatives in the country to take responsibility for their services.
  • Total government savings bonds worth 50 billion baht have already sold out after their launch early this month, said Patricia Mongkhonvanit, head of the Public Debt Management Office (PDMO).
  • Global Power Synergy Plc (GPSC), the power generation arm of PTT Group, has paid 14.82 billion baht to acquire a 41.6% stake in Avaada Energy Private Co (Avaada), one of the leading renewable energy companies in India.
  • GPSC is also spending $500 million to acquire a 25% share in the Changfang and Xidao (CFXD) offshore wind farm projects in Taiwan.
  • Total Access Communication (DTAC), the country’s third largest mobile operator, has joined with the social banking platform Line BK and Kasikorn Business Technology Group (KBTG) to provide personal loans to its users.

Coming up: The US will release June building permit figures on Tuesday, Japan will release June inflation data and Germany will release June producer prices.

  • Thailand and Japan will release June trade data on Wednesday, Canada will release June new housing prices. The European Central Bank will announce its policy decision on Thursday, and the US will release June existing home sales.
  • Germany and the euro zone will release July manufacturing PMI on Friday, and the US and Canada will release May retail sales figures.

Stocks to watch: DBS Vickers Securities recommends stocks that will benefit from the legalisation of Kratom in food and beverages, expected on Aug 24, such as OSP, CBG, RBF and ICHI. The broker also recommends stocks that will benefit from increased electric vehicle promotion, including EA, GPSC, SAT, BCPG and ROJNA, and leasing businesses expected to continue growing despite higher competition amid the economic slowdown, including MTC, SAWAD and TIDLOR.

UOB Kay Hian Securities recommends low-risk stocks including those with good dividend yields, and real estate investment trusts. Its picks are ADVANC, AIMIRT, WHART, FTREIT, EASTW, WHAUP and TTW. The weak baht is positive for food and agriculture stocks such as TVO, TU and CPF. The broker also suggests speculative trading in shippers such as PSL, TTA and RCL.

Technical view: DBS Vickers Securities sees support at 1,530 points and resistance at 1,600. Capital Nomura Securities sees support at 1,521 and resistance at 1,604.

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