RECAP: Hong Kong stocks led gains among most Asian equities yesterday, but Japanese stocks posted a weekly decline as new Prime Minister Shigeru Ishiba's seemingly shifting stance on interest rates unsettled investors.
The SET index moved in a range of 1,432.22 and 1,468.14 points this week, before closing yesterday at 1,444.25, down 0.4% from the previous week, with daily turnover averaging 59.6 billion baht.
Institutional investors were net buyers of 11.26 billion baht, followed by retail investors at 57.08 million. Foreign investors were net sellers of 10.81 billion baht, followed by brokerage firms at 513.71 million.
NEWSMAKERS: US Federal Reserve chairman Jerome Powell said the central bank is likely to reduce interest rates by 25 basis points each at its final two meetings of the year, or 50bps in total, if economic data is as expected. The Fed will not rush, he said, as new data shows continued growth in the economy and spending.
- Richmond Fed president Tom Barkin believes it may take longer than expected to bring US inflation back to the 2% target, a view that supports smaller rate cuts going forward.
- The September ISM services index in the US rose to 54.9, higher than the consensus forecast of 51.7 and the highest since February 2023, reinforcing that market view that the US economy will achieve a soft landing, a positive case for equities.
- US job openings in August increased to 8.04 million, higher than expected. The September manufacturing PMI fell to 47.3, the third month of contraction.
- The yen plunged on Thursday after Japan's new Prime Minister Shigeru Ishiba said conditions were not right for another interest rate increase by the Bank of Japan. He expressed hope that continuation of accommodative monetary conditions would support economic growth.
- Oil prices steadied yesterday after jumping 5% on Thursday, as fears that Israel may decide to strike Iranian crude facilities kept the market on edge.
- The Opec+ alliance has decided to maintain its oil production cuts totalling 5.8 million barrels per day (bpd) until the end of 2025 to support prices, as indicators point to slowing global demand growth.
- Euro zone inflation rose 1.8% in September, down from 2.2% in August and below the European Central Bank's target in September for the first time in more than three years, paving the way for faster interest rate cuts.
- The composite purchasing managers' index (PMI) for the euro zone dropped to 49.6 in September from 51.0 in August. The services PMI slid to 51.4 from 52.9.
- The pound fell by the most in almost two years versus the euro and in six months against the dollar after Bank of England Governor Andrew Bailey hinted that a faster pace of interest rate cuts.
- The US has imposed a general tariff rate of 9.1% on solar panels from China that it says are routed through Asean countries, including Thailand, Cambodia, Vietnam and Malaysia.
- US dockworkers agreed to end a three-day strike that had paralysed trade on the US East coast, with a cost to the economy of up to $5 billion a day. Negotiators hope to work out a new agreement by January.
- Toyota is pushing back the start date for electric vehicle (EV) manufacturing in the US to later in 2026, as global demand for battery-powered cars continues to soften.
- OpenAI has completed a deal to raise $6.6 billion in new funding, giving the artificial intelligence company a $157-billion valuation and bolstering its efforts to build the world's leading generative AI technology.
- Vietnam aims to fund a $67-billion high-speed railway entirely on its own, though some experts say the goal may be unrealistic. The railway from Hanoi to Ho Chi Minh City would be Vietnam's largest ever infrastructure project.
- The Philippines will impose 12% value-added tax on digital services offered by tech giants such as Amazon, Netflix, Disney and Alphabet, in a move that will level the playing field with domestic entertainment players.
- The tech giant Oracle plans to invest more than $6.5 billion on cloud services data centres in Malaysia, joining a list of US firms rushing to build up AI infrastructure in Southeast Asia.
- Google on Monday confirmed plans to invest $1 billion in Thailand on digital infrastructure in Bangkok and Chon Buri to help meet growing demand for cloud computing.
- Shareholders of Gulf Energy Development on Thursday approved a planned merger with its telecoms affiliate Intouch Holdings, paving the way for the 990-billion-baht transaction to get done.
- Investment in new renewable energy development in Thailand is expected to reach 300 billion baht in value as authorities accelerate efforts to promote clean power usage, the Energy Regulatory Commission said.
- Thai Beverage, the Singapore-listed food and beverage company, plans to allocate 1.3 billion baht to open new restaurants and renovate its existing restaurants.
- Deputy Finance Minister Paopoom Rojanasakul said GDP is expected to grow by 2.7% this year, helped by the impact of the first-phase 10,000-baht handout, and other stimulus to be lunched.
- Healthy liquidity and access to funding will do more for the economy than an interest-rate cut, Finance Minister Pichai Chunhavajira said on Thursday, though he would also like to see the latter. Speaking after discussions with the central bank governor, he said inflation this year was expected to remain below 1%, falling below the 1-3% target range the Bank of Thailand uses.
- The central bank said it has intervened to manage the baht after a rapid appreciation and high volatility compared to regional currencies. The baht has now steadied around 33 to the dollar.
- The Bangkok Metropolitan Administration has announced plans to pay 11.76 billion baht to BTS Group Holdings within 180 days, as per a Supreme Administrative Court ruling, for the operation of the Green Line mass-transit system. Two more instalments totalling 25.3 billion baht remain, plus future debt of 800 million a month.
- The Thai Retailers Association estimates 10-20% of digital wallet spending will be on consumer goods at supermarkets and retail stores, amounting to 14-20 billion baht.
- The Tourism Authority of Thailand expects 132,000 to 183,000 Chinese tourists during China's Golden Week (Oct 1-7), with revenue potentially reaching 85% of pre-Covid levels for the period.
COMING UP: On Monday, euro zone finance ministers will meet to discuss the economy, and Britain will release retail sales data. On Tuesday, the Reserve Bank of New Zealand will hold a rate meeting and the US will report monthly trade statistics.
- On Wednesday, the Fed will release minutes of its last meeting, Germany will releases trade figures and the Reserve Bank of India will announce its rate decision. Thursday brings a US inflation update, followed on Friday by German inflation, and UK GDP and trade figures.
- Locally, shares of Vayupak Fund 1 (VAYU1) will begin trading on the SET on Monday. The Thai Bond Market Association will hold a press conference with the Thai General Insurance Association. On Wednesday, Binance Thailand will hold a talk on cryptocurrency trends.
STOCKS TO WATCH: InnovestX Securities recommends three investment themes. First is stocks expected to benefit from the Vayupak Fund, including SET100 firms with dividend yields of at least 3.5%, good ESG ratings and with profit expected to grow in 2025. Its picks are KTB, BBL, BCP, ADVANC and HMPRO.
- The second theme is beneficiaries of falling interest rates in leasing (MTC and TIDLOR), property development (AP and SIRI), and commerce (CPALL). Finally, beneficiaries of demand for flood repairs include HMPRO, GLOBAL, CPALL, BJC, DCC and TASCO.
- Asia Plus Securities (ASPS) sees Mideast unrest pressuring more money to flow into safe-heaven assets. It recommends accumulating oil stocks such as PTTEP, PTT and TOP. Also recommended are stocks with good ESG ratings and potentially strong s in H2: SCC, SCGP, CPAXT, AMATA, MTC, PLANB and CBG.
TECHNICAL VIEW: Krungsri Capital Securities sees support at 1,430 points and resistance at 1,470. Daol Securities sees support at 1,440 and resistance at 1,480.
