Thai shares look set to trade in a tight range as investors are likely to be cautious ahead of the meetings of two major central banks, the Federal Reserve and BOJ, this week. While the Fed is expected to stand pat, the BOJ could add some fire power to its ultra-easing policy. While Wall Street’s rock-bottom expectations on US corporate earnings are expected to put a limit on how far the market can go, rising oil prices should provide support to market sentiment. Today’s local factors are bit and piece and tilt towards negative overall.
Local issue
Conditions on nano-finance tweaked. The Finance Ministry has updated the conditions for nano-finance operations. The ministry will cap principal at a maximum of Bt10,000 for each borrower, from the previous up to Bt100,000, and limit nano-finance companies' operating coverage to within an allowed province. The interest charged is still capped at 3% a month. Limiting the scope of the lending area will allow the government to observe loan shark activity in specific locations. (Bangkok Post)
Conditions on nano-finance tweaked. The Finance Ministry has updated the conditions for nano-finance operations. The ministry will cap principal at a maximum of Bt10,000 for each borrower, from the previous up to Bt100,000, and limit nano-finance companies' operating coverage to within an allowed province. The interest charged is still capped at 3% a month. Limiting the scope of the lending area will allow the government to observe loan shark activity in specific locations. (Bangkok Post)
Comment: Although this should have a negative impact on companies such as SAWAD and MTLS given more potential players in the market, nano-finance accounts for less than 1% of their portfolios.
B20bn fund for start-ups. The government plans to create a Bt20bn fund this year aimed at supporting start-up companies to accelerate innovation and expand into other Asean countries. Both the Finance and Science and Technology ministries are jointly drafting formal conditions for start-up companies who wish to apply for financial support. (Bangkok Post)
Budget to assist SMEs to expand abroad. The International Trade Promotion Department will allocate a budget of Bt400mn under the SMEs Proactive Project in a bid to assist SMEs that want to expand overseas, particularly to CLMV countries. The project will be in effect from 2016-2018. (The Nation)
TFFA sees a dim outlook. The Thai Frozen Foods Association (TFFA) said expected continuation of the yellow card from a year ago is likely to mean flat growth for Thai frozen food exports this year and a possible contraction in seafood exports in coming years. (Bangkok Post)
ADVANC (Bt154.50, BUY, AWS16TP Bt213.00) expected to sign partnership contract with TOT Plc. this month to provide 3G service on the state agency’s 2.1 GHz spectrum. NBTC has told TOT that its partnership with AIS complies with the frequency allocation law, if it follows the CAT Telecom-True Corp partnership model. TOT will rent some telecom equipment from ADVANC for a fee while wholesale 80% of its 2.1GHz network capacity to ADVANC. (The Nation) Comment: This provides ADVANC more capacity for its large subscriber base.
BBL (Bt163.00; BUY; AWS 16 TP Bt188.00) After the bank failed to show up and pay Bt1.78bn on behalf of Thai TV, NBTC would collect documents related to the bank guarantee for Thai TV and it is waiting to pursue legal action against BBL. (Bangkok Post) Comment: We believe this will not have a significant impact on BBL as the bank has already prepared for the worst by setting full provision.
Global issues
Federal Reserve is expected to hold interest rates steady when they meet this 26-27 Apr, leaving the path open for future rate rises. Though the US economy is generating jobs and consumer prices have risen, providing support for a Fed interest rate rise, weakness in retail sales and international trade and concern about China's economy, are among reasons Fed Chair Janet Yellen will stay cautious about further rate hikes before 2H16. A Reuters poll on Friday showed that economists expect the Fed to stand pat and then deliver a rate hike in June, and follow up with another by the end of this year. (Reuters)
Federal Reserve is expected to hold interest rates steady when they meet this 26-27 Apr, leaving the path open for future rate rises. Though the US economy is generating jobs and consumer prices have risen, providing support for a Fed interest rate rise, weakness in retail sales and international trade and concern about China's economy, are among reasons Fed Chair Janet Yellen will stay cautious about further rate hikes before 2H16. A Reuters poll on Friday showed that economists expect the Fed to stand pat and then deliver a rate hike in June, and follow up with another by the end of this year. (Reuters)
The US dollar rose to its highest level against the yen in three weeks on Friday after a report said the BOJ is considering expanding its negative rate policy to bank loans and could cut rates further. The dollar rose more than 2% against the yen to ¥111.80, its highest level against the Japanese currency since April 1. The euro was last down 0.52% against the dollar at US$1.1225. (Reuters)
USA
Wall Street ended flat on Friday after disappointing quarterly reports from Microsoft and Google-parent Alphabet slammed tech stocks, while a surge in oil prices lifted energy shares and helped limit market loses. (Reuters)
Wall Street ended flat on Friday after disappointing quarterly reports from Microsoft and Google-parent Alphabet slammed tech stocks, while a surge in oil prices lifted energy shares and helped limit market loses. (Reuters)
Wall Street has rock-bottom expectations as companies post their 1Q16 results over the next few weeks, with S&P500 companies on average seen reporting a 7.1% fall in profit, according to Thomson Reuters I/B/E/S. So far, 77% of 1Q16 earnings have exceeded expectations, which is superior to the 63% beat rate in a typical quarter. (Reuters)
US manufacturing weakened in April: Markit’s preliminary US manufacturing PMI for April came in at 50.8, falling from 51.5 in March. It was a lower-than-expected reading that marked the weakest improvement in business conditions since September 2009. It also squashes hopes that weakness in 1Q16 was just temporary. Economists had forecast a flash PMI of 52.0, according to Bloomberg, up from 51.5 in March. (Markit)
Europe
European shares fell on Friday as automaker Daimler reported disappointing results and said it would investigate its US emissions certification process, including for its Mercedes brand. Poor sales also hit luxury group Kering, owner of the Gucci brand. (Reuters)
European shares fell on Friday as automaker Daimler reported disappointing results and said it would investigate its US emissions certification process, including for its Mercedes brand. Poor sales also hit luxury group Kering, owner of the Gucci brand. (Reuters)
Euro zone business growth slowed in April: Markit's Composite Flash PMI for the euro zone dipped to 53.0 from March's 53.1, matching a 13-month low in February. Economists had predicted a rise to 53.2. A reading above 50 denotes growth in activity. The ECB's swathes of cheap loans and interest rate cuts, alongside a top-up to its monthly bond purchases, appear to have had little effect on private sector growth. A PMI covering manufacturing confounded hopes for a rise to 51.8, instead falling to 51.5 from 51.6. The services PMI was 53.2, above March's 53.1 but missing the Reuters poll median of 53.3. (Reuters)
Asia
The BOJ might opt to hold steady in its policy meeting this week on 27-28 Apr as it assesses the impact of its negative interest rate policy unveiled on 29 Jan. A semi-annual report on the country's banking system issued on Friday by the central bank said the policy has caused some disruption in fund flows and will hurt financial institutions' profits for the time being. (Reuters)
The BOJ might opt to hold steady in its policy meeting this week on 27-28 Apr as it assesses the impact of its negative interest rate policy unveiled on 29 Jan. A semi-annual report on the country's banking system issued on Friday by the central bank said the policy has caused some disruption in fund flows and will hurt financial institutions' profits for the time being. (Reuters)
Abe to go for extra budget after recent quakes: PM Shinzo Abe ordered his government on Sunday to compile an extra budget package to fund reconstruction from recent earthquakes that hit Kumamoto prefecture in southwestern Japan, with an aim to put it into effect by 1 Jun. (Reuters)
The downturn of Japan’s manufacturing sector gathered speed in April. The Nikkei Flash Japan manufacturing PMI fell from 49.1 in March to 48.0, its lowest since January 2013 and the second successive month for which the index has signalled a deterioration in the sector’s overall health. As the data were collected over a period when Japan was hit by a series of earthquakes, some of the weakness in the latest survey reflects disruptions to manufacturing and supply chains. (Reuters)
China stocks edged up on Friday, as strength in consumer and tech shares offset a slump in resources plays, but major indexes posted their biggest weekly decline in three months. (Reuters)
Commodities
Oil prices rose on Friday and notched their third straight week of gains as market sentiment turned more upbeat amid signs a persistent global supply glut may be easing. US energy firms cut oil rigs for a fifth week in a row to the lowest level since 1949. Brent futures ended the session up 1.3% at US$45.11 per barrel. US crude settled up 1.3% at US$43.73 a barrel. Brent has surged 4.5% this week and US crude 8.4% as both benchmarks notched a third week of gains. (Reuters)
Oil prices rose on Friday and notched their third straight week of gains as market sentiment turned more upbeat amid signs a persistent global supply glut may be easing. US energy firms cut oil rigs for a fifth week in a row to the lowest level since 1949. Brent futures ended the session up 1.3% at US$45.11 per barrel. US crude settled up 1.3% at US$43.73 a barrel. Brent has surged 4.5% this week and US crude 8.4% as both benchmarks notched a third week of gains. (Reuters)
Oil rig counts down to the lowest level: The US rotary rig count was down 9 at 431 for the week of 22 Apr. It is 501 rigs (53.8%) lower than last year. Rig count is again at the lowest level since Baker Hughes started counting rigs in 1949. It is likely the lowest back to around 1860 or 1900 if only rotary drilling rigs are counted. (Baker Hughes)
Gold struggled to recover from losses on Monday due to strength in the dollar and as investors took a cautious stance ahead of the Fed policy meeting this week. Spot gold was little changed at US$1,231.20 an ounce by 0041 GMT, after dropping 1% on Friday. (Reuters)
Source: aws.co.th / settrade.com
