Thai shares are poised to trade higher today in line with global equities after Federal Reserve Chair Janet Yellen called for caution on raising interest rates citing global risks. The resulting weaker dollar helped oil and commodities pare losses in after-hour market trading, bolstering market sentiment today. Local factors are mixed again today. IMF’s moderate growth estimate for Thailand is neutral while the approvals on Pink Line and Yellow Line rail projects and Songkran stimulus measures are positive. Industrial output contraction in Feb is negative but the drop was still better than expected.
Local issue
IMF expects moderate growth in Thai economy. International Monetary Fund projects Thailand’s real GDP growth at 3% this year and 3.2% in 2017, continuing from a 2.8% recovery in 2015. Public investment would remain the key driver over the next few years, while a slight improvement in confidence and low energy prices foreshadow a pickup in private consumption, resulting in headline inflation turning positive in 2016. IMF mentioned risks including possibilities of slow execution of megaprojects, prolonged negative inflation, and the huge household debts, as well as external risks regarding China's economy slowing and global financial volatility. (IMF/Bangkok Post)
IMF expects moderate growth in Thai economy. International Monetary Fund projects Thailand’s real GDP growth at 3% this year and 3.2% in 2017, continuing from a 2.8% recovery in 2015. Public investment would remain the key driver over the next few years, while a slight improvement in confidence and low energy prices foreshadow a pickup in private consumption, resulting in headline inflation turning positive in 2016. IMF mentioned risks including possibilities of slow execution of megaprojects, prolonged negative inflation, and the huge household debts, as well as external risks regarding China's economy slowing and global financial volatility. (IMF/Bangkok Post)
Approval of Pink Line and Yellow Line. The cabinet yesterday approved Bt111bn projects to build the 34.5km Pink Line from Bangkok to Nonthaburi province and 30.4km Yellow Line from Bangkok to Samut Prakan province. The construction will be funded on a public-private partnership (PPP) basis and the bidding process would take place within the next three months. (Bangkok Post)
New tax incentive scheme approved for Songkran festival. The cabinet yesterday approved a tax incentive in a bid to boost domestic spending and encourage people to spend their holiday domestically. Individual taxpayers who dine at restaurants issuing tax invoices during 9-17 Apr can claim an income tax deduction up to Bt15,000. The cabinet also resolved to extend for another year Bt15,000 tax deduction allowing those whom stay at hotels and spend on travel. It is retrospective from 1 Jan to 31 Dec 2016. (Bangkok Post) Comment: Stocks that should benefit directly from this news are ERW (AWS 16TP Bt5.50), CENTEL (AWS 16TP Bt47.00), MINT, SPA, M while stocks that should gain indirect benefit are AAV, BA, THAI, NOK, RP, ROBINS, CPN.
Industrial output contracted in Feb. According to the Industry Ministry, the manufacturing production index (MPI) in Feb declined 1.62% YoY, but the contraction was less than a 2.55% drop forecasted by Reuters poll. Feb’s output fall was mainly led by autos, electronics, clothes, and steel while capacity utilization was 65.7%, up from 63.93% in Jan. (Bangkok Post)
LHBANK (Bt2.02) announced that its board yesterday approved the company to enter into a MOU in relation to a share subscription agreement with CTBC. Under this MOU, the company agrees to issue 7.545bn new ordinary shares through a private placement to CTBC and CTBC accordingly agrees to subscribe the shares for Bt2.20/share. After the completion of the transaction, CTBC will hold 35.6% of total paid-up capital. (SET) Comment: This marks a success for LHBANK after a long process of seeking business partners. The move is part of its plan to expand the business of Land and Houses Bank PCL supporting long-term growth. The transaction is expected to be completed by 3Q16.
Global issues
Unambiguously dovish Yellen: Federal Reserve Chair Janet Yellen called for caution on raising interest rates. In her first comments since the Fed held steady on rates earlier this month, Yellen said global risks remained, including uncertainty over China and low oil prices. Her cautious tone contrasted with recent comments from other Fed officials who had expressed support for a more aggressive approach to raising interest rates this year. (Reuters)
Unambiguously dovish Yellen: Federal Reserve Chair Janet Yellen called for caution on raising interest rates. In her first comments since the Fed held steady on rates earlier this month, Yellen said global risks remained, including uncertainty over China and low oil prices. Her cautious tone contrasted with recent comments from other Fed officials who had expressed support for a more aggressive approach to raising interest rates this year. (Reuters)
Reduced chance of rate hikes: Fed funds futures implied that markets now see a 5% chance the Fed will raise rates by a quarter point at its April policy meeting and 33% in June, below the 10% and 37% chance seen on Monday, respectively. (Reuters’ IFR)
US Treasury prices pared gains slightly on Tuesday as stronger-than-forecast data on US consumer confidence in March soothed some worries about flagging consumer spending in 1Q16. Benchmark 10-year Treasury notes were last up 7/32 in price for a yield of 1.860%, down 2 basis points from Monday. (Reuters)
The US dollar fell against other major currencies on Tuesday after Federal Reserve Chair Janet Yellen’s dovish speech on rate hikes. The euro rose nearly 1% against the dollar to US$1.1302, crossing US$1.13 for the first time in 11 days, and was set to post its biggest one-day percentage gain against the greenback in nearly two weeks. (Reuters)
USA Wall Street shares finished higher on Tuesday, with the S&P500 closing at its highest in 2016, after Federal Reserve Chair Janet Yellen called for caution on raising interest rates, which is what investors always want to hear. (Reuters)
Stronger-than-expected US consumer confidence in March: The Conference Board said on Tuesday its US consumer confidence index rose to 96.2 in March from an upwardly revised 94.0 in February. Economists had forecast a reading of 94.0. (Reuters)
US single-family home prices rose less than expected in January. The S&P/Case Shiller composite index of 20 metropolitan areas rose 5.7% YoY in January, matching the increase the month before. That was just below the 5.8% estimate from a Reuters poll of economists. (Reuters)
Europe
European equities advanced on Tuesday after a long weekend, with insurers leading the market higher after companies such as RSA Insurance and NN Group rose following some bullish broker comments. Investors were also awaiting Fed Chair Janet Yellen's speech after the markets closed. (Reuters)
European equities advanced on Tuesday after a long weekend, with insurers leading the market higher after companies such as RSA Insurance and NN Group rose following some bullish broker comments. Investors were also awaiting Fed Chair Janet Yellen's speech after the markets closed. (Reuters)
Robust loan growth in Feb: Data from the ECB showed that lending growth to euro zone companies and households rose at its fastest rate since late 2011 in February, suggesting the euro area recovery was continuing. (Reuters)
Asia
Japan's factory output in February fell the most since 2011 when a devastating earthquake ruptured the supply chain, stoking fears of another recession and renewing pressure on policymakers to take evasive action. Industrial output fell 6.2% MoM in February, largely in line with economists' median estimate. It followed a 3.7% rise in the prior month, which was the first gain in three months. (Reuters)
Japan's factory output in February fell the most since 2011 when a devastating earthquake ruptured the supply chain, stoking fears of another recession and renewing pressure on policymakers to take evasive action. Industrial output fell 6.2% MoM in February, largely in line with economists' median estimate. It followed a 3.7% rise in the prior month, which was the first gain in three months. (Reuters)
Japan's parliament approved a record ¥96.72tn (US$851.5bn) state budget for fiscal 2016 on Tuesday, paving the way for a fully-fledged debate on additional stimulus spending to spur the flagging economy. PM Shinzo Abe wants to front-load spending in the annual budget for the coming fiscal year starting in April and to adopt a fresh extra budget, while speculation is rife that he may again delay a sales tax increase planned for April 2017. (Reuters)
China's net gold imports via main conduit Hong Kong rose in February, from a 17-month low hit in the previous month, buoyed by restocking after Lunar New Year and strong investment demand. Despite the increase, arrivals remain much lower than the 2015 monthly average, raising doubts over the strength of demand from the top consumer amidst a global price rally. China's net gold imports rose to 53.869 tonnes last month from 33.041 tonnes in January. (Reuters)
Commodities
Oil prices fell about 3% on Tuesday, reflecting growing concern that a 2-month rally was fading as demand fails to keep up with swelling global supply, including new output from Kuwait and Saudi Arabia. Brent futures settled down US$1.13 (-2.8%) at US$39.14 a barrel. US crude settled US$1.11 lower (-2.8%) at US$38.28 per barrel. (Reuters)
Oil prices fell about 3% on Tuesday, reflecting growing concern that a 2-month rally was fading as demand fails to keep up with swelling global supply, including new output from Kuwait and Saudi Arabia. Brent futures settled down US$1.13 (-2.8%) at US$39.14 a barrel. US crude settled US$1.11 lower (-2.8%) at US$38.28 per barrel. (Reuters)
Gold jumped over 1% on Tuesday after dovish comments from US Fed Chair Janet Yellen. Spot gold rose 1.4% to US$1,238.21 an ounce, recovering from Monday's one-month low of US$1,208.15. US gold futures for April delivery were up US$17.50 an ounce at US$1,237.60. (Reuters)
Source: aws.co.th / settrade.com
