Asia hits pause button after week of gains

RECAP: Asian equities paused yesterday after a week of decent gains led by the return of risk-on sentiment in China, especially among technology storks, but tariff worries continue to hang over the region.

Thai shares plunged to a four-year low on Wednesday, and have remained below 1,300 points, pressured by several negative factors including uncertainties surrounding President Donald Trump's policies and domestic confidence issues.

The SET index moved in a range of 1,252.26 and 1,316.41 points this week, before closing yesterday at 1,282.09, down 2.5% from the previous week, with daily turnover averaging 52.11 billion baht.

Retail investors were net buyers of 1.94 billion baht, followed by foreign investors at 1.46 billion. Brokerage firms were net sellers of 2.31 billion baht, followed by institutional investors at 1.09 billion.

NEWSMAKERS: The US goods trade deficit hit a record $1.2 trillion last year, with exports reaching a record $3.2 trillion, the Commerce Department said. Imports of goods and services grew 6.6% to a record $4.1 trillion.

• President Donald Trump paused the 25% tariffs on Mexican and Canadian imports for a month after they proposed stricter border controls to address migration and drug issues, easing investor concerns about oil supply.
• Mr Trump went ahead with a new 10% tariff on Chinese goods, and China responded with a 10% tariff on US crude oil, agricultural equipment and certain vehicles, plus 15% tariff on US coal and liquefied natural gas. Beijing also put several companies, including Google, on notice for possible sanctions.
• China's antitrust regulator is also reported to be looking into Apple's policies and App Store fees, as well as US farm equipment makers and the owner of the fashion brand Calvin Klein.
• US lawmakers have proposed a bill to ban the Chinese AI program DeepSeek from being used on government devices over concerns about user data security.
• Citigroup expects gold prices, now trading around $2,850 an ounce, to hit $3,000 within three months, with geopolitical tensions and trade wars stoked by Donald Trump boosting demand for safe-haven assets.
• The Bank of England on Thursday cut its benchmark interest rate by 25 basis points to a 19-month low of 4.5%, though it warned inflation would rise "quite sharply" to peak at 3.7% later this year, up from 2.8% in the last forecast.
• Japanese wages rose at the fastest pace in nearly three decades in December, supporting the Bank of Japan's rate hike decision. Nominal cash earnings for workers climbed 4.8% from a year earlier, up from 3.9% in November.
• The US Postal Service on Wednesday reversed a brief ban on parcels from China, which it announced after President Trump scrapped a tariff exemption for parcels valued below $800. It said it was working on an "efficient collection mechanism" for tariffs on low-value shipments, mainly from e-commerce sites.
• Nissan Motor called off merger talks with Japanese rival Honda, citing conditions proposed by Honda as unacceptable. Abandoning the tie-up that would have created the world's third-largest automaker will prompt struggling Nissan to seek a new partner.
• Vietnam's trade surplus with the US soared to a record high of $123 billion last year, US data showed, potentially complicating Hanoi's efforts to stave off tariffs from the new Trump administration.
• Shares of Google parent Alphabet fell 7% on Wednesday, after quarterly earnings showed stalled cloud growth and massive spending of $75 billion. Cloud revenue, while growing 30% to $12 billion, fell short of expectations, raising questions about its ability to compete in the AI infrastructure market.
• The Reserve Bank of India on Friday lowered its benchmark repurchase rate by 25 basis points to 6.25%, the first cut since May 2020, in a move intended to stimulate the sluggish economy.
• The Stock Exchange of Thailand is preparing to adjust the weighting criteria for the SET50 and SET100 indices, capping the weight of any single stock at a maximum of 10% per index.
• The first phase of the government's cash handout, which cost taxpayers 140 billion baht and was distributed to 14 million disabled people and state welfare cardholders, did not increase consumption as envisaged, according to Kiatnakin Phatra Research Centre. Domestic consumption in the fourth quarter was close to that of the first three quarters, it said.
• Thailand's consumer inflation in January ticked up to 1.3% year-on-year from 0.95% a month earlier, in line with market expectations.
• Prime Minister Paetongtarn Shinawatra will return today from an official visit to China, where she signed 14 memoranda of understanding to enhance cooperation in various sectors including the economy, artificial intelligence, space technology and agriculture.
• Thailand on Wednesday cut electricity, internet and fuel supply to five areas of Myanmar in an attempt to cripple call-centre scam gangs that have become a threat to national security.
• The Board of Investment (BoI) has approved a project to build a 1.2-billion-baht Jurassic World theme park in Bangkok featuring animatronic dinosaurs.
• Thailand aims to have a draft of a strategic plan for its semiconductor sector ready in 90 days, keen to attract fresh investment amid a renewed US trade war with China, said BoI secretary general Narit Therdsteerasukdi.
• The Ministry of Tourism and Sports says the government will bring back the popular co-pay domestic tourism stimulus measure, in which approved travel and hotel expenses are shared 50:50 between travellers and the government.
• A new co-payment rule for health insurance policies is set to take effect on March 20, but should affect only 5% of policyholders, says the Thai Life Assurance Association (TLAA).
• The Real Estate Information Center said housing prices rose 0.8% in the fourth quarter of 2024, the ninth straight month of increases, while condo prices rose 3.6%, affected by higher costs for land, construction materials and labour.
• The Ministry of Commerce said agricultural exports in 2024 exceeded $300 billion for the first time, growing 5.4% and concentrated in a few key products: fruit, rice, rubber, chicken and canned and processed seafood.
• The Bank of Thailand reported the January Business Sentiment Index at 48.5, unchanged from the previous month, supported by increased orders and lower costs but pressured by a consumption slowdown while people awaited the Easy e-Receipt tax-saving programme.
• The December manufacturing production index was 90.18, contracting 2.1% year-on-year, according to the Office of Industrial Economics. It cited the slowdown in the automotive sector, high household debt and energy costs, and an influx of foreign goods.

COMING UP: On Monday, Britain will release retail sales and China will update new lending figures. On Tuesday, the US Energy Information Administration releases its near-term energy market outlook. On Wednesday, the US reports core inflation. On Thursday, the UK releases fourth-quarter GDP, Germany delivers an inflation update and the US releases initial jobless claims and producer prices. Friday brings euro zone GDP and US retail sales. Locally, the SET will report January trading figures on Monday and Eastspring Asset Management will hold a media briefing.

STOCKS TO WATCH: Bualuang Securities advises investors to exercise caution with some stocks and wait until Q4 results are released. They include electronics (KCE, HANA), food and beverage (ITC, TU and COCOC), property (LH, SPALI and PSH) and automotive (AH).

• The brokerage recommends stocks that could deliver positive surprises such as AMATA, AWC and NETBAY, and stocks with good profit margins relative to expenses, namely CPAXT, TRUE and BTG. As for large-cap DELTA, although Q4 earnings might beat forecasts, it could become harder to speculate on the price given multiple challenges the company is facing.
• InnovestX Securities believes the SET has adjusted down sharply, making valuations and dividend yields attractive. Nonetheless, investors need to monitor US tariff developments, given the volatility they create in risky assets.
• Trading turnover on the Thai market has decreased, as investor confidence remains weak. InnovestX recommends BBL with a fundamental target price of 180 baht, TIDLOR (21 baht) and AOT (72 baht).

TECHNICAL VIEW: InnovestX Securities sees support at 1,230 points and resistance at 1,300. Krungsri Securities sees support at 1,250 and resistance at 1,300.