Expect SET to trade in a tight range today. Although the Federal Reserve kept rates unchanged and lowered the pace of monetary policy tightening, which reduced the chance of capital outflows from emerging markets in the near term, investors are still cautious Britain may vote to leave the EU next week, which might cause turmoil in global financial markets. Most local factors are positive today. The nationwide roll-out of 4G and digital economy are expected to enhance the local telecom market value by a sharp 11.5% to Bt597bn this year which is significant to the overall economy. BOI’s approvals in the first five months of the year were 4 times the amount in the same period last year, reflecting strong FDI and private investment.
Local issue
NSTDA expects 11.5% growth in telecom market this year to Bt597bn because of the nationwide 4G network roll-out and increasing development of the digital economy in country. Mobile non-voice service is projected to surge by 41.2% to Bt152bn, while voice service is expected to decline another 13% to Bt94.7bn. The telecom equipment market is expected to reach Bt256bn this year. (Bangkok Post)
NSTDA expects 11.5% growth in telecom market this year to Bt597bn because of the nationwide 4G network roll-out and increasing development of the digital economy in country. Mobile non-voice service is projected to surge by 41.2% to Bt152bn, while voice service is expected to decline another 13% to Bt94.7bn. The telecom equipment market is expected to reach Bt256bn this year. (Bangkok Post)
Blue Line extension will be opened for bidding on rail systems. There will be a meeting of a joint committee between the government enterprises and the PPP Committee led by Deputy prime minister Somkid Jatusripitak to grant BEM concession of Mechanical and Electrical (M&E) system and Operations and Maintenance (O&M) services of the Blue Line extension including Tao Poon – Bang Sue station. (Kaohoon)
Comment: This project will have total value of Bt80bn-Bt100bn, separated into Bt20bn-Bt25bn for system contractor (likely to CK), construction period of 36 months. If it is approved, this will benefit and release overhang for BEM and CK’s backlogs. Contract signing should occur in the next 3 months after July. However, if it is not approved, the government will open to public bidding.
Headway on Orange Line. Board of MRTA approved the draft Terms of Reference (TOR) of the Orange Line (East) at the Thailand Cultural Center - Minburi worth Bt92.5bn and a distance of about 21 km. This was better than the earlier news that the budget after cabinet approved was Bt84bn. Tender documents will be prepared 1 Jul 2016. Bidders will then submit bidding documents in the next 90 days and contract is expected to be signed in early 2017. (Kaohoon)
Comment: The Orange Line (East) would be divided into six contracts for both surface and underground work. We expect contractors such as ITD, CK, STEC, UNIQ to get the work. CK, ITD qualify for underground work while STEC and UNIQ will likely get the flyover work.
BOI is confident it will reach full-year target. Board of Investment (BOI) said it had already approved 504 projects with a combined investment value of Bt229bn during the first five months of the year, four times the amount in the same period last year. The BOI's full-year target is maintained at Bt450bn. BOI has also approved in principle to a personal income tax cut for researchers and experts working in ten targeted industry clusters. (Bangkok Post)
TAT sees 13% rise in foreign travelers. Tourism Authority of Thailand (TAT) projects foreign-tourist arrivals in the first half of this year at 16.67mn, a 13% YoY increase. Revenue generated from these visits is estimated at Bt824bn, up 17% YoY. TAT said forward flight bookings to Thailand, particularly for long-haul markets in Europe, send a positive sign. (The Nation)
Registration due for “PromptPay” in July. PromptPay, a money transfer service via internet and mobile banking and a part of the state’s e-payment initiative, is set to start registration on 15 Jul nationwide. The mechanism of this service is that it will use citizens’ ID card number or mobile phone numbers to link with a bank account, so cash transactions can be made easily. The scheme will also offer free service for transactions not exceeding Bt5,000. (Bangkok Post)
Comment: Most banks cannot really assess the effect of fee cutting at the moment as they need to see how many people register for the service.
Another move to counter loan sharks. The government plans to make another move to tackle loan sharks by offering borrowers Bt50bn in new soft loans to refinance non-formal debts. These soft loans will be provided through the Bank for Agriculture and Agricultural Cooperatives (BAAC) and Government Savings Bank (GSB), in which each bank will receive a budget of Bt25bn to lend low-income borrowers, said BAAC president Luck Wajananawat. (Bangkok Post)
Global issues
The US Federal Reserve kept key interest rates unchanged (at 0.25%-0.50%) on Wednesday and signaled it still plans to raise rates twice in 2016, though it said slower economic growth would crimp the pace of monetary policy tightening in future years. A sharp slowdown in US hiring in May had fueled doubts about the strength of the labor market going into the Fed's policy meeting. The Fed cut its US GDP growth forecast to only 2% this year and in 2017, 0.1 percentage point lower than its previous estimates for each year. It also cut its longer-term federal funds rate by a quarter point to 3%. Fed Chair Janet Yellen acknowledged the Brexit was one of the factors in the latest rate decision, saying the 23 Jun referendum would have consequences for economic and financial conditions in global financial markets. (Reuters)
The US Federal Reserve kept key interest rates unchanged (at 0.25%-0.50%) on Wednesday and signaled it still plans to raise rates twice in 2016, though it said slower economic growth would crimp the pace of monetary policy tightening in future years. A sharp slowdown in US hiring in May had fueled doubts about the strength of the labor market going into the Fed's policy meeting. The Fed cut its US GDP growth forecast to only 2% this year and in 2017, 0.1 percentage point lower than its previous estimates for each year. It also cut its longer-term federal funds rate by a quarter point to 3%. Fed Chair Janet Yellen acknowledged the Brexit was one of the factors in the latest rate decision, saying the 23 Jun referendum would have consequences for economic and financial conditions in global financial markets. (Reuters)
US Treasury yields fell on Wednesday after the Fed kept US interest rates unchanged and lowered its economic growth expectations, prompting investors to write down the chances for more rate hikes this year. Benchmark 10-year US Treasury notes rose 6/32 in price to yield 1.59%. (Reuters)
The dollar fell on Wednesday after the Fed held interest rates steady and lowered its economic growth forecasts for this year and next, suggesting it would be less aggressive in tightening policy after 2016. The dollar fell to ¥105.50, the lowest since mid-October 2014. It has since recovered to ¥105.97, down 0.1%. The euro also gained against the dollar, up 0.5% to US$1.1265, and rising 0.4% versus the yen to ¥119.39. (Reuters)
USA
Wall Street ended lower for a fifth straight session on Wednesday after the Federal Reserve left interest rates unchanged and investors worried about the result and impact of next week’s referendum in Britain on whether to leave the EU with recent opinion polls indicating growing support for such a move. They fear that a fractured EU could critically damage an already feeble global economy. (Reuters)
Wall Street ended lower for a fifth straight session on Wednesday after the Federal Reserve left interest rates unchanged and investors worried about the result and impact of next week’s referendum in Britain on whether to leave the EU with recent opinion polls indicating growing support for such a move. They fear that a fractured EU could critically damage an already feeble global economy. (Reuters)
US producer prices rose for a second straight month in May as the cost of energy products and services increased. The producer price index for final demand increased 0.4% last month after rising 0.2% in April. In the 12 months through May, the PPI slipped 0.1% YoY after being unchanged in April. Economists had forecast the PPI gaining 0.3% last month and slipping 0.1% YoY. (Reuters)
Europe
European shares rose on Wednesday after a five-day losing streak caused by jitters over next week's British referendum on EU, with a jump in base metals and a reassuring earnings update and bid talk boosting Zodiac Aerospace. (Reuters)
European shares rose on Wednesday after a five-day losing streak caused by jitters over next week's British referendum on EU, with a jump in base metals and a reassuring earnings update and bid talk boosting Zodiac Aerospace. (Reuters)
Asia
LDP: Govt should act if Brexit vote makes yen surge. The policy chief of Japan's ruling Liberal Democratic Party said that the government should act if the outcome of the British referendum next week causes excessive and disorderly moves in currency markets. Tomomi Inada echoed authorities' concerns about a potential spike in the yen, perceived as a safe-haven currency during times of heightened risk aversion, in the event of "Brexit". (Reuters)
LDP: Govt should act if Brexit vote makes yen surge. The policy chief of Japan's ruling Liberal Democratic Party said that the government should act if the outcome of the British referendum next week causes excessive and disorderly moves in currency markets. Tomomi Inada echoed authorities' concerns about a potential spike in the yen, perceived as a safe-haven currency during times of heightened risk aversion, in the event of "Brexit". (Reuters)
The BOJ is expected to keep monetary policy steady today even as volatile financial markets, sluggish global growth and anemic inflation keep policymakers under pressure to do more to reflate the economy out of stagnation. However, there is a chance BOJ Governor Haruhiko Kuroda could spring a surprise monetary easing if he sees recent yen gains as damaging enough to the export-reliant economy to justify action. (Reuters)
China May new yuan loans beat forecasts: Chinese banks extended 985.5bn yuan (US$149.56bn) in new yuan loans in May, exceeding analysts' expectations and well above the previous month's levels, as the central bank keeps policy accommodative to support the slowing economy. Economists had expected new loans would climb to 750bn yuan last month, from a six-month low of 556bn yuan in April. (Reuters)
China’s money supply growth slows in May: The PBOC said on Wednesday that broad M2 money supply grew 11.8% YoY, down from April's 12.8%. Analysts had expected May growth of 12.5%. (Reuters)
Commodities
Oil prices fell for a fifth straight day on Wednesday, their longest losing stretch since February, on worries Britain might leave the EU while the Fed signaled plans for two US rate hikes this year despite slower growth expectations. Brent crude futures' front-month settled down 86 cents (-1.7%) at US$48.97 a barrel. The front-month US crude futures settled down 48 cents (-1.0%) at US$48.01 per barrel. (Reuters)
Gold hit a six-week high on Wednesday, climbing for the sixth straight session after the Fed lowered its economic growth forecasts through 2017, indicating it will be less aggressive in tightening monetary policy next year. Spot gold was up 0.7% at US$1,293.86 an ounce, after rising to US$1,296.70, the highest since May 3. (Reuters)
Base metals jump: Aluminium hit its highest level in nearly six weeks on Wednesday and copper also jumped as the dollar dipped and investors bought more risky assets ahead of a Fed meeting.
Source: aws.co.th / settrade.com
