Expect the SET to trade in a tight range today as although global risk appetite seems to improve after Fed Chair Janet Yellen pushed back expectations for a rate increase in the upcoming US FOMC meetings, investors may take a cautious stance before Chinese trade data that is due later today. While rising crude prices will bolster energy shares, most local factors today are negative. Investor confidence dropped in May. The new property tax could dampen demand for condos and property as a whole. The EU pressured Thailand again on the fishery issue, which does not bode well.
Local issue
The new property law, approved by the Cabinet yesterday, seeks to levy taxes nationwide on property and land from next year onward according to their use. Local governments can levy the 0.03%-0.3% rate on second-home owners, 0.05%-0.1% on a first homes valued over Bt50mn, 0%-0.1% on agricultural land, 0.3%-0.5% on commercial and industrial property and 1%-3% on undeveloped land. The Thai Condominium Association believes the impact on homeowners will be minimal. On the negative side, this will dampen demand for new city condominium projects as this tax will add to their financial burden and may affect second-home demand and the property market as a whole. Condos now account for about half of all residential units launched each year. On the plus side, developers can anticipate the release of more sites by landlords. (The Nation)
The new property law, approved by the Cabinet yesterday, seeks to levy taxes nationwide on property and land from next year onward according to their use. Local governments can levy the 0.03%-0.3% rate on second-home owners, 0.05%-0.1% on a first homes valued over Bt50mn, 0%-0.1% on agricultural land, 0.3%-0.5% on commercial and industrial property and 1%-3% on undeveloped land. The Thai Condominium Association believes the impact on homeowners will be minimal. On the negative side, this will dampen demand for new city condominium projects as this tax will add to their financial burden and may affect second-home demand and the property market as a whole. Condos now account for about half of all residential units launched each year. On the plus side, developers can anticipate the release of more sites by landlords. (The Nation)
Investor confidence was lower in May on concerns about the Fed's interest rate hike and the weak global and Thai economies. Federation of Thai Capital Market Organizations (Fetco) reported Investor Confidence Index for the three months to August fell by 9.01% to 93.48 in May. Foreign investors' confidence sank to 77.78 from 111.11 in April and retail investor sentiment dipped to 94.46 from 101.19, while institutional investors jumped to 109.38 from 100. The construction sector was the most attractive while banking was the least attractive. (Bangkok Post)
Revised Petroleum Act gets cabinet nod, before going to a vote in the National Legislative Assembly. The revised Act, earlier approved by the Council of State, was approved by the cabinet yesterday including allowances for the production sharing contract (PSC) and service contract (SC) systems as alternatives for benefit sharing in upstream petroleum. (Bangkok Post)
EU pressures Thailand on improving fisheries. The bloc’s fisheries and social affairs chiefs, in a letter yesterday to Deputy Prime Minister Gen. Prawit Wongsuwan said talks in July in Bangkok on fighting fish fraud and labor abuses will be a crucial opportunity for Thailand to present concrete and robust measures. The letter also said barring a breakthrough on the issue next month and tangible progress by the end of this year, a ban might follow. (Bangkok Post)
BA (Bt24.50) Bangkok Airways has just won the green light from the Chinese authorities to start Samui-Chengdu services four times per week in the middle of next month with an Airbus 319 jetliner. By working closely with a well-known Chinese travel agent with an extensive network, BA, has been assured of a high load factor on its Samui-Chengdu service. BA is re-entering the huge China market and intends to offer three flights per week to Chongqing and a daily service to Guangzhou. (Bangkok Post)
Global issues
The World Bank slashed its 2016 global growth forecast on Wednesday to 2.4% from the 2.9% estimated in January due to stubbornly low commodity prices, sluggish demand in advanced economies, weak trade and diminishing capital flows. It cut the 2016 forecast of US GDP growth to 1.9% from 2.7%. The euro area saw a slight downgrade of its 2016 forecast to 1.6%. Among major emerging market economies, the World Bank kept China's growth forecast unchanged at 6.7% this year after 2015 growth of 6.9%. India's robust economic expansion also is expected to hold steady at 7.6%. (Reuters)
The World Bank slashed its 2016 global growth forecast on Wednesday to 2.4% from the 2.9% estimated in January due to stubbornly low commodity prices, sluggish demand in advanced economies, weak trade and diminishing capital flows. It cut the 2016 forecast of US GDP growth to 1.9% from 2.7%. The euro area saw a slight downgrade of its 2016 forecast to 1.6%. Among major emerging market economies, the World Bank kept China's growth forecast unchanged at 6.7% this year after 2015 growth of 6.9%. India's robust economic expansion also is expected to hold steady at 7.6%. (Reuters)
The main focus today is China trade data which will portray the underlying strength of the world’s second largest economy.
US Treasury prices rose on Tuesday as comments from Fed Chair Janet Yellen on Monday eased some worries about the economy, while underscoring views the Fed may be in no rush to raise rates. Benchmark 10-year notes gained 3/32 in price to yield 1.713%, down from 1.723% late on Monday. (Reuters)
The dollar was subdued on Tuesday after Fed Chair Yellen on Monday did not specify on the timing of a rate hike. The dollar index eased 0.1% at 93.811, holding above a near four-week trough of 93.745 set on Monday. (Reuters)
USA
Wall Street shares moderately rose on Tuesday, with the S&P500 ending at its best level since July, helped by a big jump in energy shares and investor confidence that higher interest rates will not derail the economy. (Reuters)
Wall Street shares moderately rose on Tuesday, with the S&P500 ending at its best level since July, helped by a big jump in energy shares and investor confidence that higher interest rates will not derail the economy. (Reuters)
Europe
European shares touched a one-week high on Tuesday after Fed Chair Janet Yellen pushed back expectations for a rate increase without raising concerns over the strength of the world's largest economy. (Reuters)
European shares touched a one-week high on Tuesday after Fed Chair Janet Yellen pushed back expectations for a rate increase without raising concerns over the strength of the world's largest economy. (Reuters)
Asia
China's foreign exchange reserves in May fell to US$3.19tn, their lowest since December 2011, central bank data showed on Tuesday, likely due to the effects of a stronger dollar and sporadic official intervention. Economists had predicted foreign exchange reserves would fall to US$3.20tn at the end of May. The reserves fell by US$27.9bn in May - the biggest monthly drop since February. They rose by US$7.1bn in April and US$10.3bn in March. (Reuters)
China's foreign exchange reserves in May fell to US$3.19tn, their lowest since December 2011, central bank data showed on Tuesday, likely due to the effects of a stronger dollar and sporadic official intervention. Economists had predicted foreign exchange reserves would fall to US$3.20tn at the end of May. The reserves fell by US$27.9bn in May - the biggest monthly drop since February. They rose by US$7.1bn in April and US$10.3bn in March. (Reuters)
China said it will give the US a 250bn yuan (US$38bn) investment quota for the first time to buy Chinese stocks, bonds and other assets, deepening financial ties and interdependence between the world's two largest economies. The announcement was made at the bilateral Strategic and Economic Dialogue in Beijing on Tuesday. (Reuters)
Japan's economy expanded at a 1.9% annualised rate in 1Q16, revised up from a preliminary reading of 1.7% growth, Cabinet Office data showed on Wednesday. The revision to 1Q16 GDP compared with the median estimate of a 1.9% increase in a Reuters poll of economists. (Reuters)
Japan's current account surplus stood at ¥1.88tn (US$17.5bn) in April due to a trade surplus helped by cheap oil imports, and a solid income surplus from overseas investment. The surplus was smaller than economists' median forecast for a surplus of ¥2.32tn in a Reuters poll. It followed a surplus of ¥2.98tn in March, which was the largest surplus since March 2007. It was the 22nd straight month of surplus in the balance of payment. (Reuters)
Commodities
Oil prices jumped more than 1% on Tuesday, hitting 2016 highs, with US crude settling above US$50 a barrel the first time in almost a year, on expectations of domestic stockpile draws and worries about global supply shortfalls from attacks on Nigeria's oil industry. US crude futures settled up 67 cents (+1.4%) at US$50.36 a barrel. Brent crude futures settled up 89 cents (+1.8%) at US$51.44 a barrel. (Reuters)
Oil prices jumped more than 1% on Tuesday, hitting 2016 highs, with US crude settling above US$50 a barrel the first time in almost a year, on expectations of domestic stockpile draws and worries about global supply shortfalls from attacks on Nigeria's oil industry. US crude futures settled up 67 cents (+1.4%) at US$50.36 a barrel. Brent crude futures settled up 89 cents (+1.8%) at US$51.44 a barrel. (Reuters)
Gold inched lower on Tuesday as investors turned cautious after the metal failed to sustain a recent rally. Spot gold was down 0.1% at US$1,243.43 an ounce. US gold futures for August delivery settled down 40 cents at US$1,247 an ounce. Spot gold hit its highest since May 24 on Monday at US$1,248.40. (Reuters)
Source: aws.co.th / settrade.com
