Thai shares look set to rise today in line with most regional bourses that had positive openings after the Fed left rates unchanged and signaled no rush in rate hikes although it kept the door open to a hike in June. There is also a strong likelihood the BOJ will ease its monetary policy further given a strong yen and receding inflation. Stronger crude prices will again support the energy sector. Local factors today skew towards the positive end. SCC’s strong 1Q16 results reflect a pick-up in demand for petrochemical products and cement & building materials. Public-private sector’s strong joint efforts to solve IUU-related problems raise hopes for a positive evaluation from the EU next month.
Local issue
Fishery groups attempting to avoid EU action. In spite of the EU’s threat to maintain a yellow card on Thai seafood imports over illegal, unreported, and unregulated (IUU) fishing, the sector still hopes for a positive ruling next month as it has been partnering with the government in taking action to tackle such issues, including the use of an electronic marine catch purchasing document from this coming Sunday. Such action will control the trade of aquatic products and aquaculture development. (Bangkok Post)
Fishery groups attempting to avoid EU action. In spite of the EU’s threat to maintain a yellow card on Thai seafood imports over illegal, unreported, and unregulated (IUU) fishing, the sector still hopes for a positive ruling next month as it has been partnering with the government in taking action to tackle such issues, including the use of an electronic marine catch purchasing document from this coming Sunday. Such action will control the trade of aquatic products and aquaculture development. (Bangkok Post)
Government has no plan to extend stimulus package. Deputy Finance Minister Wisudhi Srisuphan said the government has no plan to extend the stimulus package after it expires on 28 Apr 2016, because the property market has shown signs of a strong recovery over the past six months. The stimulus went into effect last 28 Oct, the property market in the 4Q15 recorded growth in new home registrations of 13% YoY. Presales in the quarter also grew by 21% YoY. It spurred market value up by Bt50bn, from an estimation of Bt250bn. It is expected that the property market will drop by 20-30% in the two to three months after the stimulus measure expires today, and then the market will recover and return to normal. (The Nation) Comment: This should be a short term negative for developers listed in SET. Property firms will launch new projects aware of oversupply and slow demand. However, during the last six months property firms tried hard to prompt the sale of inventory, after the measure expires they will restart launching new residential projects.
SCC (Bt492.00) reported a 1Q16 net profit of Bt13.6bn, increasing 19% QoQ and 23% YoY, which beat the Bloomberg consensus estimate at Bt11.4bn by 20%. (SET) Comment: The outstanding result was firmly supported by robust petrochemical business and a recovery in the cement & building material business for the first time in the last four quarters.
KKP (Bt42.00; BUY; 16 AWS TP Bt50.00) announced that Phatra Capital, its subsidiary, has executed a sale and purchase agreement for the sale of all shares in KKTRADE with Yuanta. Specifically, Yuanta will purchase 49,999,998 shares representing 99.99% of KKTRADE shares and will procure third parties to buy the remaining shares. Total purchase price is approximately Bt686.9mn. (SET) Comment: This transaction is still subject to Thai regulatory approval and the bank expects it to be completed within three months. Note that KKP will hold an analyst meeting this morning where we expect it to provide further details.
Global issues
Fed signals no rush to hike rates: The Federal Reserve left interest rates unchanged on Wednesday, but kept the door open to a hike in June while showing little sign it was in a hurry to tighten monetary policy amid an apparent slowdown in the US economy. The FOMC described an improving labor market but acknowledged that economic growth has slowed and inflation remained low. They removed the words of global and financial risk development from their statement. Investors currently see a 23% probability that the Fed's interest rates will rise in June, up from 21% prior to the decision, according to CME's FedWatch group. (Reuters)
Fed signals no rush to hike rates: The Federal Reserve left interest rates unchanged on Wednesday, but kept the door open to a hike in June while showing little sign it was in a hurry to tighten monetary policy amid an apparent slowdown in the US economy. The FOMC described an improving labor market but acknowledged that economic growth has slowed and inflation remained low. They removed the words of global and financial risk development from their statement. Investors currently see a 23% probability that the Fed's interest rates will rise in June, up from 21% prior to the decision, according to CME's FedWatch group. (Reuters)
Longer-dated US Treasury debt prices jumped on Wednesday, snapping a seven-day streak of decreases, as the Fed left the door open for an interest rate increase in June, making shorter-dated government debt less appealing. Benchmark 10-year Treasury notes were up 20/32 in price, yielding 1.856%, down 7.5 basis points from late on Tuesday. The 10-year yield on Tuesday touched 1.941%, its highest level since 23 Mar. (Reuters)
The US dollar erased a brief rally and retreated against the euro on Wednesday, hitting a nearly one-week low against the currency, after a Fed statement reinforced expectations for just two interest rate increases this year. The US dollar index was last down 0.11% at 94.474, roughly unchanged from where the index stood before the Fed statement. (Reuters)
USA
Wall Street shares finished slightly higher on Wednesday after fears eased that the Federal Reserve would strongly signal it would raise interest rates in June, though a slump in Apple shares weighed on the Nasdaq, following its first revenue decline in over a decade. (Reuters)
Wall Street shares finished slightly higher on Wednesday after fears eased that the Federal Reserve would strongly signal it would raise interest rates in June, though a slump in Apple shares weighed on the Nasdaq, following its first revenue decline in over a decade. (Reuters)
Contracts to buy previously owned US homes increased more than expected in March to reach their highest level in nearly a year, suggesting sustained momentum in the housing market. The National Association of Realtors’ pending home sales index rose 1.4% last month to 110.5, the highest level since May. Economists had forecast pending home sales rising 0.5% last month. Pending home sales were up 1.4% YoY. (Reuters)
The US goods trade deficit narrowed sharply in March as imports tumbled, suggesting economic growth in 1Q16 was probably not as weak as anticipated. The Commerce Department’s advance report showed that the goods trade gap fell to US$56.9bn last month from US$63.4bn in February. March's comprehensive trade report, which includes services, will be released next Wednesday. Goods imports fell 4.4% to US$173.6mn last month, outpacing a 1.2% drop in exports. Economists have forecast GDP rising at a 0.7% YoY in 1Q16. The government is scheduled to publish its advance 1Q16 GDP growth estimate later today. (Reuters)
Europe
European shares edged up on Wednesday on the back of utilities and energy stocks, while Greek equities fell after euro zone officials delayed a meeting on releasing bailout funds. (Reuters)
European shares edged up on Wednesday on the back of utilities and energy stocks, while Greek equities fell after euro zone officials delayed a meeting on releasing bailout funds. (Reuters)
Asia
The BOJ is likely to debate expanding monetary stimulus at a policy meeting ending later on Thursday, as sluggish global demand hurts exports and weak wage growth undermines private consumption. (Reuters)
The BOJ is likely to debate expanding monetary stimulus at a policy meeting ending later on Thursday, as sluggish global demand hurts exports and weak wage growth undermines private consumption. (Reuters)
Japan's consumer prices fell in March at the fastest pace in three years and household spending declined at the fastest pace in a year, keeping the BOJ under pressure to implement more stimulus to support the economy. The core CPI, which includes oil products but excludes volatile fresh food prices, fell 0.3% YoY in March, more than the median forecast for a 0.2% annual decline. (Reuters)
Japan industrial output rose more than expected March. Industrial production rose 3.6% MoM in March, compared with a 2.9% increase forecast by economists. (Reuters)
Japan labour demand rose to the highest in two decades. The jobs-applicants ratio also rose to 1.30 in March, which shows labour demand is the strongest since December 1991 when the ratio was 1.31. (Reuters)
China's service account deficit widened to US$21.0bn in March from February's US$16.0bn, the foreign exchange regulator said on Wednesday. March's gap was largely led by a US$19.1bn in net spending by Chinese who spent more abroad than foreign tourists did in China, according to the State Administration of Foreign Exchange (SAFE). In 1Q16, the services account deficit stood at US$57.7bn. China had a US$24.6bn surplus on trade of goods in March. (Reuters)
Commodities
Crude oil futures rose around half a dollar on Wednesday and remained near 2016 highs as report of falling US production outweighed record US crude stocks and on a weak dollar. The US EIA reported that US crude oil production fell to 8.94mn barrels per day (bpd) last week, down almost half a million bpd from this time last year. It also reported that US crude stocks climbed 2mn barrels last week to an all-time peak of 540.6mn barrels. Brent crude futures were trading at US$46.31 per barrel, up 57 cents (+1.25%). US crude futures was up 51 cents (+1.16%) at US$44.55 a barrel. (Reuters)
Crude oil futures rose around half a dollar on Wednesday and remained near 2016 highs as report of falling US production outweighed record US crude stocks and on a weak dollar. The US EIA reported that US crude oil production fell to 8.94mn barrels per day (bpd) last week, down almost half a million bpd from this time last year. It also reported that US crude stocks climbed 2mn barrels last week to an all-time peak of 540.6mn barrels. Brent crude futures were trading at US$46.31 per barrel, up 57 cents (+1.25%). US crude futures was up 51 cents (+1.16%) at US$44.55 a barrel. (Reuters)
Gold rose for a third straight session on Wednesday, but pared gains after the Fed held interest rates unchanged but left the door ajar to a hike in June. Spot gold was up 0.3% at US$1,246.65 an ounce. US gold futures for April delivery settled up 0.6% at US$1,249.20 an ounce prior to the Fed's statement. (Reuters)
Source: aws.co.th / settrade.com
