Healthy earnings, less aggressive Fed lift shares

Recap: European and US stocks advanced yesterday amid positive corporate earnings reports and the prospect of less aggressive rate hikes from the US Federal Reserve. Hong Kong and Chinese markets pulled back as tech stocks corrected and the Chinese government signalled limited new stimulus ahead.

The SET index moved in a range of 1,548.1 and 1,576.78 points this week before closing on Wednesday at 1,576.41, up 1.53% from the previous week, in daily turnover averaging 58.61 billion baht for three operating days.

Foreign investors were net buyers of 4.38 billion baht, brokerage firms bought 381.68 million baht and institutional investors purchased 324.48 million baht worth of shares. Retail investors were net sellers of 5.08 billion baht worth of shares.

Newsmakers: The US economy shrank for a second straight quarter, as decades-high inflation undercut consumer spending and interest-rate hikes slowed investment and housing demand. GDP fell 0.9% year-on-year after a 1.6% decline in the first three months, preliminary estimate showed.

• Currencies and bonds in Asian emerging markets finished the week on a strong note, after weak US GDP data raised bets that the Federal Reserve might slow the pace of its rate hikes.
• Surging inflation and severe slowdowns in the United States and China prompted the IMF on Tuesday to downgrade its outlook for the global economy this year and next, while warning that the situation could get much worse.
• The US Federal Reserve again raised its benchmark interest rate by three-quarters of a percentage point in its ongoing battle to tamp down raging price pressures.
• Myanmar has sufficient foreign reserves to avoid an economic crisis similar to Sri Lanka's, a military government spokesman said, pushing back on suggestions by some analysts that it faces a growing possibility of default.
• Despite damaging Western sanctions imposed on Moscow in the wake of the invasion of Ukraine, Russia's economy appears to be weathering the storm better than expected as it benefits from high energy prices, the IMF said Tuesday.
• Wheat futures prices are falling as Ukraine prepares to open two Black Sea corridors for grain exports under a UN-brokered deal signed with Russia last week aimed at relieving a global food crisis. However, uncertainty remains about how long the pact will hold.
• Facebook parent Meta reported on Wednesday its first quarterly revenue drop and a plunge in profit as the social media powerhouse battles a turbulent economy and the rising phenomenon of TikTok.
• Twitter plans a shareholders' meeting on Sept 13 to vote on the proposed $44-billion takeover offer by Tesla chief Elon Musk. The billionaire faces a legal showdown with Twitter in October for walking away from his offer.
• The e-commerce giant Alibaba announced plans to seek a primary listing in Hong Kong, potentially giving access to China's vast pool of investors, as indicators grow that Beijing's crackdown on the tech sector could be ending.
• Hong Kong will launch a fund worth HK$5 billion (23 billion baht) next month to support local tech companies and attract foreign startups.
• The Japanese carmaker Toyota Motor Corp plans to invest $1.8 billion in Indonesia in the next five years to produce electric vehicles, Indonesia's economics ministry said on Wednesday.
• A sharp fall in purchases by investors pulled global gold demand down 8% year-on-year in the second quarter, according to the World Gold Council.
• Shell on Thursday reported a second-quarter profit of $11.5 billion, smashing its previous record just three months earlier, lifted by a tripling of refining profits and strong gas trading.
• Currency traders' short positions on the Thai baht are the highest since 2018, according to a Reuters survey, as the Bank of Thailand is viewed as a laggard in raising interest rates.
• The Finance Ministry on Tuesday said it sees economic growth of 4% next year, and maintained its 2022 growth forecast at 3.5%, underpinned by increased domestic consumption, tourism and exports, despite higher inflation.
• The Bank of Thailand believes Thai economic growth might surpass 3% in the second quarter, mainly thanks to a rebound in domestic consumption in line with its commitment to maintain flexible inflation targeting.
• The cabinet has approved additional economic assistance measures worth 27.4 billion baht to help alleviate the hardship of people affected by higher costs of living amid high inflation.
• The dollar value of Thai exports rose by a more than expected 11.9% year-on-year in June, helped by increased global demand as well as a weak baht, Commerce Minister Jurin Laksanawisit said on Wednesday.
• An increase in the minimum daily wage of between 5% and 8% is expected in September, as it has remained unchanged for over two years, according to the Ministry of Labour and an employers' association. Labour groups had been pushing for a hike of more than 40% from the current range of 313-336 baht.
• Manufacturers are bracing for a higher policy interest rate when the Bank of Thailand mets on Aug 10, by further cutting their expenses and increasing working capital, according a poll by the Federation of Thai Industries (FTI).
• Investments by overseas companies registered under the Foreign Business Act rose by 73.5% year-on-year in the first six months of 2022, led by Japan, Singapore and the US, the Board of Investment said.
• The heavily indebted Oil Fuel Fund board resolved on Monday to keep the subsidised price of standard diesel in Greater Bangkok at 35 baht per litre, about 2.40 baht below market prices, until the end of this month.
• The cabinet has approved new tax incentives to promote the use of electric vehicles, part of government efforts to make Thailand a major EV production base.
• The aviation industry is making a recovery from the impact of the Covid-19 and Airports of Thailand (AoT) expects to see a full recovery in passenger traffic to pre-pandemic levels by the end of 2024.
• The shortage of airline seats remains a major obstacle for the recovery of Thai tourism as most European flag carriers have not resumed flights and frequencies to pre-Covid levels. Sky-high airfares linked to soaring fuel costs are also deterring travellers.
• Bangkok Expressway and Metro Plc and Italian-Thai Development have submitted proposals for the second round of bidding to build the 140-billion-baht western expansion of the Orange Line.
• The chairman of BTS Group Holdings Plc insisted the company had never asked for an extension of the Green Line transit operation concession in return for forgiveness of overdue debts owed to the company by the Bangkok Metropolitan Administration.

Coming up: China, the US, Germany and Britain will release July manufacturing PMI on Monday. The Reserve Bank of Australia will announce an interest rate decision on Tuesday and the US will release June job openings.

• New Zealand will release second-quarter employment data on Wednesday and Britain will release July composite and services PMI. The US will release July non-manufacturing PMI.
• The Reserve Bank of India and bank of England will announce interest rate decisions on Thursday. The US will release July payrolls and unemployment data on Friday. Canada will release July employment.

Stocks to Watch: Asia Plus Securities has a positive view on the prospect for more economic stimulus packages and the fifth phase of the copayment scheme, under which the government would inject around 21 billion baht into the economy. Stocks that benefit from stimulus include OSP, CBG, SAPPE , ICHI, MAKRO and TNP.

• KTB Securities recommends stocks whose prices lag the market, including YGG, NCAP, SINGER, TIDLOR and ONEE. For the medium term, the brokerage has a positive view on tourism stocks and firms with good fundamentals including GPSC, KTB, PTT and SCB.

Technical view: Maybank Securities sees support at 1,545 points and resistance at 1,590. Thanachart Securities sees support at 1,550 and resistance at 1,584.