Expect SET to trade lower today trailing a soft lead from Wall Street overnight and regional bourses this morning after the BOJ disappointed investors by holding off further stimulus. However, market losses today should be limited by PM Abe’s recent statement that he would come up with another fiscal stimulus plan in May including disaster-relief spending after the quakes. Most local factors today are negative. The MOF slashed its GDP forecast for this year down to 3.3% from 3.7% previously. Workers’ debts hit an 8-year high. KBANK has raised its credit costs this year, reflecting more cautious view over the economy and its asset quality.
Local issue
FPO slashed its GDP forecast. The Fiscal Policy Office (FPO) has cut its estimate for economic growth this year to 3.3% from 3.7% previously due to concerns over exports, including uncertainties in global economic recovery and Thailand’s structural export problems. According to FPO deputy director-general Warotai Kosolpisitkul, though exports experienced growth in Feb and Mar, an 8.9% decline in Jan’s export caused the Finance Ministry to revise down its export forecast to 0.7% contraction from 0.1% growth. (Bangkok Post)
FPO slashed its GDP forecast. The Fiscal Policy Office (FPO) has cut its estimate for economic growth this year to 3.3% from 3.7% previously due to concerns over exports, including uncertainties in global economic recovery and Thailand’s structural export problems. According to FPO deputy director-general Warotai Kosolpisitkul, though exports experienced growth in Feb and Mar, an 8.9% decline in Jan’s export caused the Finance Ministry to revise down its export forecast to 0.7% contraction from 0.1% growth. (Bangkok Post)
To amend expropriation law for Thai-Japanese rail project. The Japan International Cooperation Agency, a key lender of the double-track railroad project, asked the Thai government if it could develop land along the Thai-Japanese railroad route for commercial purposes to attract investors. The Ministry of Transport is now considering invoking Section 44 to revise the expropriation law and now the Ministry is waiting for results from the Council of State. (Bangkok Post)
UTCC found workers' debts hitting 8-year high. Under sluggish economic growth and rising cost of living while the minimum wage has been frozen, blue-collar workers’ debts per household have risen to the highest level in eight years at Bt119,061, according to a survey by the University of the Thai Chamber of Commerce (UTCC) on 1,212 workers whose monthly incomes were less than Bt15,000. 96% of the sample were in debt incurred by daily expenses, vehicles and residential purchases, while underground loans represent 60% of debt. (The Nation)
PTTEP (Bt74.50; HOLD; AWS TP Bt68.00)) reported 1Q16 net profit of Bt5.6bn (+20% QoQ, -35% YoY) which was in line with our expectation but beat the Bloomberg consensus estimate of Bt4.5bn. (SET) Comment: Maintain earnings forecast, TP, as well as HOLD recommendation. Please see our full report today.
KBANK (Bt162.00; BUY; 16 AWS TP Bt203.00) revised up its credit cost target for this year by 20bps to 190bps. The revision indicates higher default risk as the bank needs to increase provision expenses to cope with potential losses. The bank also further lowered its net interest margin target to 3.3-3.5% from 3.4-3.6% in regards to its cut in prime lending rates. (Bangkok Post) Comment: This caused us to simultaneously revise up our credit cost assumption to 190bps and assume net interest margin at 3.5%. Overall, our FY16 earnings estimate is revised down by 7.5% to Bt40.3bn, up 2.0% YoY. Our new target price is Bt203.00, from Bt205.00.
Global issues
The BOJ held off on expanding monetary stimulus on Thursday, defying market expectations even as soft global demand, an unwelcome yen rise and weak consumption threatened to derail a fragile economic recovery. The central bank also cut its inflation forecasts and pushed back the timing for hitting its 2% price target by six months. (Reuters) Comment: The BOJ may want to see what fiscal steps the Abe administration will come up with during the G7 meeting in May before taking new action and take a more cautious stance after negative responses to its negative rate move.
The BOJ held off on expanding monetary stimulus on Thursday, defying market expectations even as soft global demand, an unwelcome yen rise and weak consumption threatened to derail a fragile economic recovery. The central bank also cut its inflation forecasts and pushed back the timing for hitting its 2% price target by six months. (Reuters) Comment: The BOJ may want to see what fiscal steps the Abe administration will come up with during the G7 meeting in May before taking new action and take a more cautious stance after negative responses to its negative rate move.
US Treasury prices rose, with the two-year yield hitting one-week lows as news of anemic US economic growth in 1Q16 increased skepticism about a coming Fed rate hike and stoked safe-haven bids for US government debt. Benchmark 10-year Treasury notes were up 8/32 in price for a yield of 1.831%, down 3 basis points from Wednesday and below a near five-week high of 1.941% set on Tuesday. (Reuters)
The US dollar and euro posted their biggest daily losses against the yen in more than five years on Thursday in the wake of the BOJ's surprise decision not to further ease monetary policy. The dollar was last down more than 3% against the yen, at ¥108.06, the biggest daily decline against the yen since March 2011. The euro was last down 2.8% against the yen, at ¥122.70, also the biggest daily drop against the yen since March 2011. (Reuters)
USA
Wall Street shares drastically fell on Thursday after the Bank of Japan surprised markets by holding interest rates steady and declining to adopt more stimulus, pushing the yen sharply higher against major currencies. Positive sentiment from Facebook's upbeat 1Q16 earnings gave way to worry over the BOJ's decision. Facebook hit an all-time high of US$120.79 a share after its quarterly ad revenue jumped 57%. (Reuters)
Wall Street shares drastically fell on Thursday after the Bank of Japan surprised markets by holding interest rates steady and declining to adopt more stimulus, pushing the yen sharply higher against major currencies. Positive sentiment from Facebook's upbeat 1Q16 earnings gave way to worry over the BOJ's decision. Facebook hit an all-time high of US$120.79 a share after its quarterly ad revenue jumped 57%. (Reuters)
US GDP grew by only 0.5% in 1Q16, it slowest pace in two years as consumer spending softened and a strong dollar undermined exports and corporate earnings. Cheap oil, which has pressured the profits of oil field companies, undercut business investment. Almost all sectors of the economy weakened in 1Q16, with housing the lone star. Economists had forecast the economy expanding at a 0.7% rate in the period after growing at a 1.4% pace in 4Q15. However, a pick-up in activity is anticipated given a buoyant labor market. (Reuters)
Strong labor market: US jobless claims bounced back from a 42-1/2-year low last week, but the underlying trend remained consistent with tightening labor market conditions. The claims increased 9,000 to a seasonally adjusted 257,000 last week. Economists had forecast claims rising to 260,000 in the latest week. Jobless claims have now been below 300,000, a threshold associated with healthy labor market conditions, for 60 weeks, the longest stretch since 1973. (Reuters)
Hinting at a pickup in growth in 2Q16, the ISM's manufacturing surveys, which are closely correlated to economic activity, rebounded in recent months. The ISM’s PMI was 51.8 in Mar, 49.5 in Feb, 48.2 in Jan, 48.0 in Dec, 48.4 in Nov and 49.4 in Oct. (Reuters)
Europe
European shares were mixed on Thursday, with weakness after the BOJ unexpectedly held off from expanding monetary stimulus. (Reuters)
European shares were mixed on Thursday, with weakness after the BOJ unexpectedly held off from expanding monetary stimulus. (Reuters)
Asia
The Tokyo Stock Exchange will be closed for a national holiday today (Showa Day) and the benchmark Nikkei index ended the shortened trading week down 5%. (Reuters)
The Tokyo Stock Exchange will be closed for a national holiday today (Showa Day) and the benchmark Nikkei index ended the shortened trading week down 5%. (Reuters)
China's securities regulator ordered the country's major commodity futures exchanges this week to control speculative trading activity after a surge in prices sparked fears of a boom-and-bust cycle. In response, commodity futures exchanges in Dalian, Shanghai and Zhengzhou ordered major institutional investors that lack a commodities background to rein in their trading. (Reuters)
Commodities
Oil prices jumped 2% on Thursday, hitting 2016 highs for a third straight day as a weaker dollar had investors shrugging off record high US crude inventories and relentless pumping by major producers. Brent settled up 96 cents at US$48.14 a barrel, after hitting a 2016 high of US$48.19. US crude finished up 70 cents at US$46.03, after a year-to-date peak at US$46.14. (Reuters)
Oil prices jumped 2% on Thursday, hitting 2016 highs for a third straight day as a weaker dollar had investors shrugging off record high US crude inventories and relentless pumping by major producers. Brent settled up 96 cents at US$48.14 a barrel, after hitting a 2016 high of US$48.19. US crude finished up 70 cents at US$46.03, after a year-to-date peak at US$46.14. (Reuters)
Gold rose more than 1% on Thursday as the BOJ held off from expanding monetary stimulus, boosting the yen versus the US dollar, and after the Federal Reserve signaled it was in no rush to tighten monetary policy. Spot gold was up 1.6% at US$1,266.50 an ounce, a one-week high, while US gold futures for May delivery settled up 1.3% at US$1,265.50 an ounce. (Reuters)
Source: aws.co.th / settrade.com
