Expect the SET to trade in a tight range today in the absence of a Wall Street lead as investors brace for a Fed rate hike as early as June that could prompt another round of capital flows out of emerging markets similar to the last hike in December. HSBC’s report showed huge capital already left Asian equity markets in May. Gains on European markets overnight and a surprise increase in Japan’s industry output in April may support sentiment. Local factors today tilt towards the negative end, namely the inch-up in the jobless rate in the agricultural sector due to the severe drought and the Government Pension Fund lowering its stake in Thai stocks.
Local issue
1Q16 unemployment inched up. According to a report from NESDB, 1Q16 unemployment rate slightly rose to 0.97% of the total workforce, up from 0.94% in 1Q15 and 0.8% in 4Q15. The inch-up was due to a 2.7% decline in employment in the agricultural sector, which has been affected by severe drought. However, the non-agricultural sector increased by 1.5% corresponding to the recent economic uptick, particularly from manufacturing, construction, transportation, and tourism sectors. (Bangkok Post)
1Q16 unemployment inched up. According to a report from NESDB, 1Q16 unemployment rate slightly rose to 0.97% of the total workforce, up from 0.94% in 1Q15 and 0.8% in 4Q15. The inch-up was due to a 2.7% decline in employment in the agricultural sector, which has been affected by severe drought. However, the non-agricultural sector increased by 1.5% corresponding to the recent economic uptick, particularly from manufacturing, construction, transportation, and tourism sectors. (Bangkok Post)
State speeds up disbursement to drive economy. The Fiscal Policy Office (FPO) this year estimates to disburse 13% (Bt300bn) of the Bt2.28tn budget set for state investment in infrastructure projects and stimulus measures for the provincial economy, in an effort to shield the economy from ebbing exports stemming from China's cooling economy and uncertainties among major Western economies. Disbursement for the first seven months of fiscal year 2016 (Oct 15 – Apr 16) expanded 8.5% YoY to Bt1.7tn. (Bangkok Post)
GPF lowers stake in Thai stock. The Government Pension Fund (GPF) has lowered its investment exposure in the Thai stock market from 10.2% of the portfolio at the end of 2015 to 7-8%, saying the bourse has already peaked after reaching above 1,400 points. (Bangkok Post) Oil blocks go to auction. The National Energy Policy Council (NEPC) has decided to open new auctions for Erawan and Bongkot petroleum blocks in the Gulf of Thailand, which the concessions are due to expire in 2022 and 2023, respectively. In the event there are no bidders, the ministry will negotiate with the blocks' existing concessionaires as an alternative. The framework for the bids will be conducted within a year. (Bangkok Post)
Thailand rose to 28th in world competitiveness ranking this year, improving from 30th in 2015, said the International Institute for Management Development (IMD). The improvements included government policy, especially public spending and infrastructure investment, real GDP per capita, exchange rate stability, as well as decreased risk of political instability. Yet, exports, stock market capitalization, and tourism receipts showed declines. (Bangkok Post)
Global issues
A net US$3.2bn left Asian equity markets, excluding Japan, during the period May 1 to 24, the largest outflow since January, data from HSBC showed. Indonesia's and South Korea's bond markets, heavy recipients of foreign investment until March, are now seeing chunks of inflows reverse while Asia's currencies have also fallen quite sharply. Having dumped Asian shares on resurgent worries about China's economy, the spectre of more aggressive US interest rate rises is now forcing global investors to sell the region's bonds and currencies. (Reuters)
A net US$3.2bn left Asian equity markets, excluding Japan, during the period May 1 to 24, the largest outflow since January, data from HSBC showed. Indonesia's and South Korea's bond markets, heavy recipients of foreign investment until March, are now seeing chunks of inflows reverse while Asia's currencies have also fallen quite sharply. Having dumped Asian shares on resurgent worries about China's economy, the spectre of more aggressive US interest rate rises is now forcing global investors to sell the region's bonds and currencies. (Reuters)
The dollar reached a two-month high against a basket of currencies and a one-month high against the yen on Monday, after Federal Reserve Chair Janet Yellen fanned expectations the Fed would raise US interest rates soon. Against a basket of currencies, the dollar was up 0.2% at 95.695, while the euro recovered on slightly better than expected German inflation. The single currency had hit a 2 1/2-month low of US$1.1097 in Asia, before recovering to trade at US$1.1140, up 0.2% on the day. (Reuters)
USA
Wall Street was closed on Monday for the Memorial Day public holiday. (Reuters)
St. Louis Fed President James Bullard said on Monday global markets appear to be "well-prepared" for a summer interest rate hike from the Fed, although he did not specify a date for the policy move. He added a rebound in US GDP growth seems to be materializing in 2Q16, but reserved his opinion on if the Fed should hike in June or July for the next policy meeting. (Reuters)
Europe
European shares reached a four-week high on Monday on slightly better than expected German inflation and as investors embraced Yellen's comments that suggested the world's largest economy was strong enough to weather another rate hike. (Reuters)
European shares reached a four-week high on Monday on slightly better than expected German inflation and as investors embraced Yellen's comments that suggested the world's largest economy was strong enough to weather another rate hike. (Reuters)
Consumer prices in Germany edged up in May. The data from several German states, including North Rhine-Westphalia and Bavaria showed annual inflation edging up in May, the preliminary data showed on Monday. Consumer prices rose by 0.3% on the year in Bavaria, by 0.2% in North Rhine-Westphalia and by 0.1% in Saxony. They were unchanged in Hesse and Baden-Wuerttemberg and fell 0.2% in Brandenburg. The state readings will feed into nationwide inflation data due at 1200 GMT. (Reuters)
Asia
Japanese industrial output unexpectedly rose 0.3% in April, government data showed on Tuesday, suggesting production was holding up despite weak exports and the hit from a series of earthquakes in southern Japan during the month. The increase compared with a median market forecast for a 1.5% drop. Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to rise 2.2% in May and increase 0.3% in June. (Reuters)
Japanese industrial output unexpectedly rose 0.3% in April, government data showed on Tuesday, suggesting production was holding up despite weak exports and the hit from a series of earthquakes in southern Japan during the month. The increase compared with a median market forecast for a 1.5% drop. Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to rise 2.2% in May and increase 0.3% in June. (Reuters)
Japanese household spending fell 0.4% YoY in April in price-adjusted real terms, government data showed on Tuesday. That compared with the median forecast for a 1.4% annual decline. (Reuters)
Japan's seasonally adjusted unemployment rate was unchanged at 3.2% in April. The median estimate from a poll of economists was for 3.2%. The jobs-applicants ratio rose to 1.34 in April from 1.30 in March. The median estimate was for the ratio to remain unchanged at 1.30. (Reuters)
China's urban registered unemployment rate stood at 4.05% at the end of 2015, the Ministry of Human Resources and Social Security said in an online statement on Monday. China's premier, Li Keqiang, has said the country will hold the urban registered unemployment rate below 4.5% in 2016. (Reuters)
Chinese government bonds could receive at least US$155bn of investment flows should the relaxation of rules around foreign participation lead to their inclusion in various global indexes, JPMorgan said on Monday. China has been gradually easing foreigners' access to onshore debt markets and on Friday the state foreign exchange regulator said foreign institutions would be allowed to remit funds freely. (Reuters)
Commodities
Oil prices inched up toward US$50 a barrel on Monday, although uncertainty ahead of an OPEC producer-group meeting later in the week was expected to cap gains. Brent crude futures settled up 44 cents at US$49.76 a barrel, reversing losses from earlier in the day. There was no settlement in US West Texas Intermediate crude futures because of the US Memorial Day holiday, but at 1839 GMT WTI was up 27 cents at US$49.60. (Reuters)
Oil prices inched up toward US$50 a barrel on Monday, although uncertainty ahead of an OPEC producer-group meeting later in the week was expected to cap gains. Brent crude futures settled up 44 cents at US$49.76 a barrel, reversing losses from earlier in the day. There was no settlement in US West Texas Intermediate crude futures because of the US Memorial Day holiday, but at 1839 GMT WTI was up 27 cents at US$49.60. (Reuters)
Gold fell below US$1,200 for the first time since mid-February on Monday, as comments from Fed chief Janet Yellen on the likelihood of higher US interest rates sent the dollar to two-month highs. Gold fell as much as 1.1% to US$1,199.60 an ounce, its lowest since Feb. 17, and was down 0.3% at US$1,204.18 an ounce by 1232 GMT. The metal was on track for nine sessions of losses, its longest losing streak since March 2015. (Reuters)
Source: aws.co.th / settrade.com
