Fears of rate hikes continue to pressure equities

Recap: World stocks fell on Friday as news of imminent rate hikes from the European Central Bank and concerns over upcoming US inflation data spurred fears over global economic growth.

The SET index moved in a range of 1,630.37 and 1,652.11 points this week before closing yesterday at 1,632.62 points, down 0.91% from the previous week, in daily turnover averaging 63.7 billion baht.

Retail investors were net buyers of 7.27 billion baht, brokerage firms bought 479.82 million baht. Foreign investors were net sellers of 5.89 billion baht. Institutional investors offloaded 1.87 billion baht worth of shares.

Newsmakers: The European Central Bank on Thursday said it was ready to start raising its interest rates to combat high inflation, starting with a quarter-percentage-point hike in July. Analysts expect that to be followed with a half-point increase in September. The ECB will also end its bond-buying stimulus on July 1.

• The OECD warned Wednesday that the world economy will pay a "hefty price" for Russia's invasion of Ukraine as it slashed its 2022 growth forecast and projected higher inflation.
• A combination of geopolitical tensions and higher costs are pushing large companies to look for alternative production sites. Vietnam's strong economic performance in recent years has drawn the attention of European firms.
• President Joe Biden on Monday invoked the Defense Production Act to spur US solar panel manufacturing and exempted tariffs on solar panels from four Southeast Asian nations including Thailand for two years as part of his push for clean energy.
• China has approved the release of dozens of new video games, boosting the shares of some of its biggest tech firms on hopes that a long-running and painful crackdown on the sector is easing.
• Foreign firms operating in Southeast Asia are demonstrating a high level of confidence as they look to expand their footprint in a market of some 640 million people, says HSBC.
• Indonesia has launched an export acceleration scheme aimed at shipping at least 1 million tonnes of crude palm oil and derivatives following a recent export ban, according to a Trade Ministry regulation made public on Thursday.
• The Bank of Thailand kept its benchmark interest rate steady at 0.5% in a split decision on Wednesday but signalled an imminent increase amid mounting inflation risks.
• Analysts now say the BoT is expected to raise rates starting in August to quell persistently high inflation, ending a three-year long easy monetary policy stance to shield the pandemic-hit economy.
• Thailand's headline inflation, gauged by the consumer price index (CPI), hit a 13-year high of 7.1% year-on-year in May, largely attributed to the rise in energy and food prices.
• Thai consumer confidence dropped for a fifth straight month in May, hitting a ninth-month low, due to worries over higher living costs and the impacts of Russia's invasion of Ukraine, a survey showed on Thursday.
• The Thailand Industry Sentiment Index (TISI) fell to a seven-month low of 84.3 points in May amid economic uncertainties ranging from rising inflation to political conflicts overseas, says the Federation of Thai Industries (FTI).
• The Oil Fuel Fund Office has agreed to help gasohol users for the first time by reducing their contributions to the fund amid soaring fuel prices. The price of heavily subsidised diesel was raised by one baht to 34 baht.
• Energy authorities are considering imposing a price cap on oil sold by Thai refineries to better control energy inflation, with ongoing measures to tackle the problem scheduled to end this month.
• The Tourism Authority of Thailand (TAT) has drawn up a budget of more than 100 million baht to revive the battered travel sector, and will propose it to the Centre for Economic Situation Administration for approval.
• The 300-baht tourism fee faces another delay, with collections now expected to start in the fourth quarter at the earliest. But the Covid task force is expected to approve cancelling the widely criticised Thailand Pass from July 1 when it meets on June 17.
• Tourism operators are supporting at the proposal of Bangkok Governor Chadchart Sittipunt to extend nightlife hours until 2am and lift the outdoor mask mandate to boost tourism demand and attract workers back to the industry.
• An opposition bill to allow small-scale distillers and craft beer makers to enter the market, currently monopolised by large producers, has passed the first reading -- but with the government speaking against it.
• Marred by intense competition and several promotional campaigns, the three major e-commerce operators in Thailand -- Lazada, Shopee and JDCentral -- have racked up a combined 39 billion baht in operating losses over the past seven years, according to the data analytics firm Creden Data.
• Thai solar cell exports have a brighter outlook for at least two years after the Biden administration on Monday announced a two-year pause on imposing any new tariffs on such products made in Thailand, Cambodia, Malaysia and Vietnam.
• More than 160,000 migrant workers will be brought into Thailand without requiring quarantine under a new memorandum of understanding in a bid to reduce illegal border crossers, according to the Labour Ministry.
• The national oil and gas conglomerate PTT Plc is to move into the production of medical consumables amid growing demand, especially in ageing societies, under a new partnership with petrochemical and plastic manufacturers.
• Central Pattana Plc (CPN) is rolling out 37 hotel projects in 27 provinces worth a combined 10 billion baht to be managed by Centara Hotels and Resorts, aiming to create 3,900 jobs nationwide.

Coming up: Britain will release April manufacturing production on Monday and average employment earnings and unemployment claims on Tuesday. The same day, Germany will release June economic sentiment and the US will release May producer prices. China will release May industrial production on data and the US will release May retail sales on Wednesday.

• The US Federal Reserve will announce its interest rate decision on Thursday (Thailand time). Policy decisions from the Bank of England and the Swiss National Bank are due the same day. Also coming Thursday is New Zealand first-quarter GDP, May employment data from Australia, and May building permits in the US. May consumer prices in the euro zone are due on Friday.

Stocks to watch: Krungsri Securities suggests investment in stocks benefiting from high oil prices such as PTTEP, TOP, IVL, SPRC, BCP and BANPU. Stocks set to benefit from the reopening are AOT, MINT, CENTEL, BDMS, BH, CPALL, CPN and AMATA. Stocks that will perform with rate hikes and the Thai economic recovery include KBANK, BBL, SCB and TTB, while export stocks such as TU, ASIAN, GFPT, KCE and HANA benefit from the baht weakening.

• Capital Nomura Securities recommended stocks benefiting from baht depreciation including GFPT, CPF, TU, SAPPE, ASIAN, MEGA and KCE, while stocks that will benefit from the reopening are KTC, MAJOR, SABINA, MAKRO, CPALL, VGI, BEM, CRC and HTC.

Technical view: DBS Vickers Securities sees support at 1,600 points and resistance at 1,650. Capital Nomura Securities sees support at 1,593 points and resistance at 1,655.