Inflation fears continue to sap global sentiment

Recap: Global shares were mixed yesterday as concerns over inflation, the global economic slowdown and the prolonged Russia-Ukraine war continue to weigh on investor sentiment.

The SET index moved in a range of 1,563.39 and 1,596.27 points this week and rose 4.34 points yesterday to end the week at 1,572.67, up 0.25% from the previous week, in low daily turnover averaging 59.31 billion baht.

Foreign investors were net buyers of 2.49 billion baht and institutional investors bought 2.23 billion baht. Retail investors were net sellers of 2.45 billion baht and brokerage firms offloaded 2.28 billion baht worth of shares.

Newsmakers: The surge in the US dollar has set Asian currencies on course for their worst quarter since 1997 and created a dilemma for central bankers. Some are tapping their large reserves to bolster their currencies.

  • The S&P 500 recorded its worst first-half percentage loss since 1970 and the Dow had its worst first half since 1962 as US stocks continued to be battered by inflation, recession fears and fallout from the Russia-Ukraine war.
  • Inflation in the euro zone surged to a fresh record of 8.6% in June, from 8.1% in May, driven by soaring food and energy costs.
  • Russia said on Monday that two of its debt payments were blocked from reaching creditors, pushing the country closer to its first foreign default in a century due to sanctions over the Ukraine offensive.
  • Malaysia is expected to spend 77.3 billion ringgit (US$17.6 billion) in subsidies and cash aid this year, the largest amount in history, to help temper the effects of rising prices, its finance minister said.
  • Vietnam plans to cut import tariffs on gasoline to 12% from 20% to help ease inflationary pressure, the government said on Thursday.
  • Garuda Indonesia has halved its debt and achieved comparable cuts to aircraft leasing costs in negotiations that have set the airline up for future profitability, the Indonesian government said on Tuesday.
  • Billionaire Elon Musk has gained access to the Twitter data that he said was needed to complete his $44-billion acquisition, but data scientists and specialists doubt he will get the conclusive answers he seeks about the number of fake accounts on the platform.
  • Nissan Motor Co has suspended vehicle production in Russia until at least Sept 30 as there is little prospect of the situation improving, its chief executive said.
  • European Union negotiators have agreed on anti-money laundering rules for cryptocurrencies, in the latest sign that regulators are tightening up the freewheeling sector.
  • Bitcoin prices, fresh off their biggest-ever monthly decline in June, continued to gyrate wildly yesterday, briefly pushing past $21,000 in Asian trade before retreating to $19,410 later in London.
  • North Korean hackers are most likely behind a recent attack that stole as much as $100 million in cryptocurrency from the US company Horizon Bridge, three digital investigative firms have concluded.
  • Gold closed out its worst quarter since early 2021, with a drop of 6.2% in prices since April 1, as a strong showing from the dollar and rising interest rates kept investors away.
  • Thailand’s economy is expected to expand by 2.9% in 2022, unchanged from a forecast in April, supported by private consumption and a tourism recovery, according to the World Bank.
  • The Thai economy in May improved from April, with private consumption and investment indicators increasing in line with an uptick in economic activity, despite a sharp spike in the inflation rate, says the Bank of Thailand.
  • The BoT forecasts the global economy will slow down next year, but not dip into recession amid attempts by central banks to contain inflation.
  • Exports in May rose by a faster than expected 10.5% from a year earlier, helped by increased global food demand and production and a weak baht, with the trend set to continue this year, Commerce Minister Jurin Laksanawisit said on Friday.
  • Thai exports are still projected to expand by 5-8% this year, despite emerging signs of an economic slowdown in the US and EU, says the Thai National Shippers’ Council.
  • The Ministry of Finance plans to sell up to 272 billion baht worth of government bonds in the July-September period as part of debt management plans.
  • The Oil Fuel Fund is now 102.5 billion baht in the red and rising from subsidising fuel prices.
  • The Ministry of Commerce and the Thai Chamber of Commerce plan to negotiate with fertiliser suppliers in Saudi Arabia about purchases in a move to address high prices and shortages in the country.
  • Restaurants remained among the top three sectors for new business registrations in May for the fourth straight month, suggesting a gradual recovery thanks to the country’s reopening, says the Ministry of Commerce.
  • Foreign tourist arrivals will total 9.3 million this year, the Ministry of Tourism and Sports is now forecasting. That’s 55% more than a Bank of Thailand prediction of 6 million early this month.
  • Kasikorn Research Center forecasts tourism income this year would be 37% of the pre-pandemic level, attributable to both local and foreign travellers in the second half.
  • The Tourism Council of Thailand is more optimistic about Chinese travellers returning after the country slashed its quarantine length and gave Thai airlines permission to resume two flights to China per week.
  • The government on Tuesday approved a five-year investment of 338 billion baht in the Eastern Economic Corridor (EEC) from 2023, part of efforts to boost the country’s long-term growth.
  • Thailand’s factory output unexpectedly dropped in May due mainly to supply shortages for manufacturing cars and some electronic products due to lockdowns in major Chinese port cities, the Ministry of Industry said.
  • Thailand aims to assemble electric vehicles (EVs) domestically within a year, ahead of the previous target of 2024, says Prime Minister Prayut Chan-o-cha.
  • The cabinet on Tuesday gave Asia Pacific Potash Corporation (APPC), a wholly owned subsidiary of Italian-Thai Development Plc, permission to embark on a 36-billion-baht potash mining project in Udon Thani.
  • The state-run Government Housing Bank (GH Bank) is letting LGBTQ+ couples jointly take out mortgage loans, said president Chatchai Sirilai.
  • Telenor Group, the major shareholder in Total Access Communication Plc (DTAC), insists it has no plans to leave Thailand and is optimistic the planned merger with True Corp will be completed in July.
  • Mobile market leader AIS is said to be looking at acquiring the fixed broadband provider Triple T Broadband (TTTBB) from Jasmine International to keep a competitive edge as rivals True Corp and DTAC pursue a merger.

Coming up: The Reserve Bank of Australia will announce its interest rate decision on Tuesday. Britain will release June composite and services PMI on Tuesday, followed by June construction PMI on Wednesday. The US will release June non-manufacturing PMI and May job openings.

  • The US will release June crude oil inventory data on Thursday and Canada will release June PMI. The US will release June nonfarm payrolls and unemployment on Friday. Canada will release June employment data.

Stocks to watch: DBS Vickers Securities recommends buying bank stocks after the Bank of Thailand eased rules on dividend payments. Top picks are KBANK, TISCO and KKP. Among oil refiners, the brokerage recommends TOP, ESSO, BCP and SPRC. For anti-commodity stocks, it picks BGRIM, GPSC, SCGP, CBG, OSP, AAV, BA and EPG. Stocks benefiting from continued reopening are AOT AAV, BA, ERW, CENTEL and MINT.

  • UOB Kay Hian Securities recommends food and beverage stocks, including OSP, CBG, ICHI and SAPPE. Among tourism stocks, it recommends AOT, CENTEL, ERW, MINT, BAFS, AAV, SHR, VRANDA and SPA. Retail-focused stocks worth looking at are CPALL, MAKRO and MAJOR. Food and agribusiness plays include CPF, GFPT, TFG, TU, KSL, KTIS, KBS, BIS and ASIAN.

Technical view: DBS Vickers sees support at 1,550 points and resistance at 1,590. UOB Kay Hian sees support at 1,545 and resistance at 1,590.

Source: bangkok post