Expect the market to tread water today after Wall Street pulled back from record levels and ahead of this week’s two major central bank meetings in the US and Japan. Oil prices fell to 3-month lows on global supply glut which will likely to weigh on energy shares. Locally, more SME assistance is coming, including tax breaks for large corporations that help SMEs, a Bt2.3bn venture capital fund to support SMEs, and SME start-up funds. Although these measures have limited direct impact on market sentiment, they will bring about positive long-term results to the economy.
Local issue
Tax measures for helping SMEs to cabinet approval today. Finance Minister Apisak Tantivorawong will seek cabinet approval for the new tax measures today. These include a tax break on expenses for large corporations that help SMEs and a tax break for investments in social development projects. The measures are expected to be effective immediately after approval through the end of 2018. (Bangkok Post)
Tax measures for helping SMEs to cabinet approval today. Finance Minister Apisak Tantivorawong will seek cabinet approval for the new tax measures today. These include a tax break on expenses for large corporations that help SMEs and a tax break for investments in social development projects. The measures are expected to be effective immediately after approval through the end of 2018. (Bangkok Post)
Comment: Another attempt from the state to strengthen SMEs as they are the group most likely hit by economic slowdown.
Venture capital fund to assist SMEs. A venture capital fund, collaborated between KTB (Bt17.20; BUY; 16 AWS TP Bt20.00), SET, and NSTDA, is expected to officially launch in 3Q16. The fund is named the SME Private Equity Trust Fund worth Bt2.3bn and is expected to help SMEs access financial sources to expand their businesses, especially those using high technology to create innovative products and SME startups with high potential (Bangkok Post)
Comment: The fund is set in response to the cabinet order to help SMEs, which eventually would stimulate the country’s economy.
To streamline export process. In response to Prime Minister Prayut Chan-o-cha's directive to enhance the export process for rice, sugar, rubber and frozen goods and hazardous products, the commerce ministry initially plans to streamline the country’s rice export process by reducing the number of procedures rice exporters must complete from 14 to four through the use of electronic systems. Ministry estimates exporters’ travel and paper costs would significantly reduce from 12,140 baht to 2,076 baht for each contract. (Bangkok Post)
Comment: The streamlining of the rice export process would be a role model for the export of the other products.
Global issues
The Federal Reserve is seen as unlikely to raise interest rates on Wednesday. Improving economic data has increased expectations that the Fed will raise rates in December. Fed fund futures on Monday indicate a 56% chance of a rate hike in December, up from 48% on Friday. (Reuters)
US Treasury yields climbed on Monday to four-week highs following a weak US$26bn two-year note sale, part of US$88bn of coupon-bearing government debt being auctioned this week. The yield on the two-year note was up over 1 basis point to 0.723%. Benchmark 10-year Treasury notes were last down 2/32 in price for a yield of 1.575%, up almost 1 basis point from Friday. (Reuters)
The dollar was steady against the euro and yen on Monday as investors look ahead to central bank meetings with the Fed due to conclude a two-day meeting on Wednesday and the BOJ due to meet on Friday. The dollar was little changed on the day at ¥106.04, and steady against the euro at US$1.0984. (Reuters)
USA
Wall Street shares ended lower on Monday, pulling back from record highs, as oil fell to three-month lows, weighing on energy shares and leading the market down. Investors also awaited the rate decision from Federal Reserve’s 2-day policy meeting that begins today and an avalanche of quarterly reports. (Reuters)
Europe
European stocks rose on Monday, with low-cost airline Ryanair climbing after it issued a bullish outlook while shares in William Hill surged on bid interest from its rivals. (Reuters)
The IFO business morale survey showed the resilience of Germany, Europe's biggest economy, to the turmoil triggered by the Brexit. Even though the IFO reading fell to 108.3 in July from 108.7 in June, it still came in stronger than the Reuters consensus forecast for a reading of 107.5. (Reuters)
Asia
Japan's government is likely to inject ¥6tn (US$57bn) in direct fiscal outlays into the economy over the next few years under a planned stimulus package, double the amount initially planned, the Nikkei newspaper reported on Tuesday. The total size of the package, which could be announced as soon as 2 August, could exceed ¥20tn. (Reuters)
China scored a diplomatic victory on Monday as Southeast Asian nations dropped a US-backed proposal to mention an international court ruling against Beijing's territorial claims in the South China Sea in a joint statement. The deadlock between ASEAN foreign ministers was broken only when the Philippines withdrew its request to mention the ruling in the face of resolute objections from Cambodia, China's closest ASEAN ally. (Reuters)
The yuan edged higher on Monday but stayed within sight of last week's near-six year low against the dollar as investors worried that improved economic activity in 2Q16 was a blip with weakness likely in coming months. The spot market opened at 6.6830 per dollar and was changing hands at 6.6774 at midday, 0.12% away from the midpoint of 6.6860 per dollar, and weaker than Friday's setting of 6.6669. (Reuters)
Commodities
Oil prices fell more than 2% on Monday, with US crude hitting a three-month low, on rising concerns that a global glut of crude and refined products would pressure markets, delaying a long-anticipated rebalance in the market. US crude settled down US$1.06 at US$43.13 a barrel, after touching a three-month low of US$42.97 during the session. Brent crude futures ended the session down 97 cents at US$44.72 a barrel, after hitting their lowest since May 10 at US$44.55. (Reuters)
Gold pared losses on Monday as the dollar and world stock markets turned lower ahead of central bank meetings in the US and Japan. Spot gold was down 0.2% at US$1,319.63 an ounce. US gold futures for August delivery settled down US$3.9 (-0.29%) at US$1,319.50. (Reuters)
Source: aws.co.th / settrade.com
