Thai shares are poised to trade higher today drawing support from gains to near record-high closes on Wall Street, more data supporting China’s economic growth and a surprise surge in oil prices on hopes that oil producers may eventually agree to ease the glut. Nevertheless, market movements are likely to be limited ahead of three major central bank meetings. The main local factors are mostly positive today, namely new special economic zones covering three eastern provinces, increasing car production and 1mn taxpayers to be exempt from new personal income tax structure.
Local issue
Additional SEZs to be created in three eastern provinces. The government will set up special economic zone (SEZ) covering three eastern provinces. This Eastern Economic Corridor project will cover 26,000 rai of land owned by both Industrial Estate Authority of Thailand and industrial estates run by the private sector in Chon Buri, Rayong, and Chacheongsao. (Bangkok Post)
Additional SEZs to be created in three eastern provinces. The government will set up special economic zone (SEZ) covering three eastern provinces. This Eastern Economic Corridor project will cover 26,000 rai of land owned by both Industrial Estate Authority of Thailand and industrial estates run by the private sector in Chon Buri, Rayong, and Chacheongsao. (Bangkok Post)
Car output increased in March, but sales remained dim. The Federation of Thai Industries (FTI) reported that car production hit a 30-month high in March at 192,811 vehicles, up 8.19% YoY with increases in all segments. Domestic car sales, however, declined 2.3% YoY to 72,404 vehicles, while shipments fell by 14.33% YoY to 109,334 units. The FTI forecasts domestic sales of 750,000 to 780,000 vehicles this year, down 2.5% to 6.2%, a fourth straight year of decline, but this means there should be a recovery in 2H16 following higher car output in March. Meanwhile, FTI expects vehicle exports to see flat growth this year because overseas demand, except from Asia and Oceania, remains sluggish. (Bangkok Post)
About 1mn more to be exempted from tax. According to the Revenue Department, an additional 1mn individual taxpayers will be exempt from paying personal income tax after caps on personal and expense allowances are revised up. Such a move will benefit low- and middle-income earners the most. The state also estimates that it will lose around Bt32bn in tax revenues from such an adjustment in the personal income tax structure. (Bangkok Post)
BANPU (Bt18.80) has announced a 19.4%-stake investment with a cost of US$112mn (Bt3.9bn) in the Chaffee Corners Joint Exploration Agreement (JEA), which runs an unconventional shale-gas production project in the northeastern section of the Marcellus shale play in the state of Pennsylvania. Gas proven reserves, net interest to BANPU, are 156 billion cubic feet with current net output of 21 million cubic feet per day mostly serving power sector demand in the US. (SET) Comment: This is BANPU’s strategy to diversify its business from traditional coal business. Despite low-risk investment along with a benefit from instant revenue recognition, we expect low investment return as the acquisition cost per barrel oil equivalent is not cheap, along with an unfavorable gas oversupply condition.
THAI (Bt14.80) has been given an operating profit target of Bt12bn this year while the company is expected to post a net profit of Bt2bn up from a net loss of Bt13.1bn last year. The airline's revenue is projected to surge to Bt194bn this year, up 7% YoY. The airline reported its first quarter earnings to the State Enterprise Policy Committee yesterday with revenue at Bt48.8bn and load factor of 77.9% in 1Q16. (Bangkok Post)
Global issues
US Treasuries were steady on Wednesday and yields held in their recent tight range with no major economic releases due this week and as investors looked ahead to next week's Federal Reserve meeting. Benchmark 10-year note yields fell to 1.77%, down from 1.78% on Tuesday. Yields have held between 1.81% and 1.69% since the beginning of April. (Reuters)
US Treasuries were steady on Wednesday and yields held in their recent tight range with no major economic releases due this week and as investors looked ahead to next week's Federal Reserve meeting. Benchmark 10-year note yields fell to 1.77%, down from 1.78% on Tuesday. Yields have held between 1.81% and 1.69% since the beginning of April. (Reuters)
The US dollar rose against the euro on Wednesday on fears that comments from the ECB on Thursday could hurt the euro, while some riskier commodity currencies remained near multi-month highs on greater relief over China's economy. The euro eased from a one-week high against the dollar of US$1.1386 touched earlier in the session and was last down 0.28% at US$1.1324 ahead of today’s ECB meeting. (Reuters)
Three major central bank meetings loom. The ECB has a meeting later today. The Federal Reserve holds its policy review 26-27 Apr, while the BOJ has its meeting on 28 Apr. The ECB is not expected to change anything given its aggressive measures launched last month. It is clear that Japanese officials are unhappy with the strength of the yen and there is some talk the BOJ could ease further. For the Fed, no action is expected but investors will need to firm the tone of its statement if it wants to prepare markets for a June rate hike. (Reuters)
USA
Wall Street shares moderately gained ground on Wednesday, ending less than 2% short of a record-high close as a rebound in oil prices added to optimism sparked by a raft of good earnings reports. Due to the market's recent oil-fueled gains and the tempered outlook for corporate profits, the S&P500 is trading at about 17.8 times expected earnings, its most expensive level since 2004, according to Thomson Reuters Datastream. (Reuters)
Wall Street shares moderately gained ground on Wednesday, ending less than 2% short of a record-high close as a rebound in oil prices added to optimism sparked by a raft of good earnings reports. Due to the market's recent oil-fueled gains and the tempered outlook for corporate profits, the S&P500 is trading at about 17.8 times expected earnings, its most expensive level since 2004, according to Thomson Reuters Datastream. (Reuters)
US home resales rebounded more than expected in March, suggesting the housing market recovery remained intact despite signs that economic growth probably stalled in 1Q16. The National Association of Realtors reported existing home sales surged 5.1% to an annual rate of 5.33mn units last month. Economists had forecast sales rising 3.5% to a 5.30mn-unit pace. (Reuters)
US GDP growth estimates for 1Q16 are currently as low as a 0.2% annualized rate. The economy grew at a 1.4% rate in 4Q16. (Reuters)
Europe
European shares rose on Wednesday, helped by a late rally in crude oil prices and gains among banking stocks. (Reuters)
European shares rose on Wednesday, helped by a late rally in crude oil prices and gains among banking stocks. (Reuters)
The ECB is widely expected to hold interest rates unchanged at record lows in its policy meeting today. However, President Mario Draghi is likely to drive home the case for ultra-loose monetary policy. (Reuters)
Asia
Most Japanese companies are expected to maintain or see a small increase in operating profits this financial year, a Reuters poll showed, shrugging off a sharp rise in the yen due to an expected pick-up in consumer spending and business investment. (Reuters)
Most Japanese companies are expected to maintain or see a small increase in operating profits this financial year, a Reuters poll showed, shrugging off a sharp rise in the yen due to an expected pick-up in consumer spending and business investment. (Reuters)
S&P reaffirmed Japan’s ratings at 'A+/A-1' with stable outlook. Strong external balance sheet further strengthens support for sovereign ratings. Japan's very weak fiscal attributes are an important weakness in its credit metrics. Stable outlook on Japan reflects expectations for economic growth of 2% and the prospects that negative interest will slow increase in government debt burden. (Reuters)
Outstanding loans to China's property sector increased 22.2% to 22.51tn yuan (US$3.48tn) at the end of March from a year earlier, according to the PBOC. Earlier official data showed that China's property investment growth quickened to 6.2% in 1Q16. (Reuters)
Chinese steel futures stretched big gains to a third day on Wednesday, surging 6% to hit their upside limit as traders restocked on the building material betting demand will stay strong in the months ahead. Steel's rally lifted the spot price of raw material iron ore back above US$60 a tonne for the first time in six weeks and firmer iron ore futures on Wednesday suggested further increases for physical prices. (Reuters)
Commodities
Oil prices rose 4% on Wednesday after a smaller-than-expected build in US crude inventories offset glut worries stirred by the end of a Kuwaiti strike, and as oil bulls bet that major crude producers would meet again to try to curtail output. Moscow, however, denied media reports that Russia planned to host such a meeting. Brent's front-month contract settled up US$1.77 (+4.0%) at US$45.80 a barrel. It had fallen to a session low of US$42.81. US crude's front-month contract, May, finished up US$1.55 (+3.8%) at US$42.63 a barrel. (Reuters)
Oil prices rose 4% on Wednesday after a smaller-than-expected build in US crude inventories offset glut worries stirred by the end of a Kuwaiti strike, and as oil bulls bet that major crude producers would meet again to try to curtail output. Moscow, however, denied media reports that Russia planned to host such a meeting. Brent's front-month contract settled up US$1.77 (+4.0%) at US$45.80 a barrel. It had fallen to a session low of US$42.81. US crude's front-month contract, May, finished up US$1.55 (+3.8%) at US$42.63 a barrel. (Reuters)
The US EIA said crude stocks rose 2.1mn barrels last week, compared with forecasts for a 2.4mn-barrel build and industry group American Petroleum Institute's data showing a 3.1mn-barrel rise. (Reuters)
Gold steadied on Wednesday as a firmer tone to the US dollar held gains in check. Spot gold was up 0.2% at US$1,252.96 an ounce, off a one-week high of US$1,258.00 touched overnight. US gold futures for April delivery settled up 20 cents an ounce at US$1,253.20. (Reuters)
Aluminium hit a six-month peak on Wednesday as the appetite for risk increased among investors who took a more upbeat view on the Chinese economy and saw commodities as relatively cheap. Three-month aluminium on the LME climbed 2.2% to close at US$1,622.50 a tonne, the strongest since October 2015. (Reuters)
Source: aws.co.th / settrade.com
