Consolidation

Thai shares look set to trade in a tight range today, with a negative bias, as global risk appetite seems to be subdued after Wall Street pulled back from record highs and crude prices plummeted. The stimulus story remains intact. ECB kept policy rates unchanged as widely expected but Mario Draghi left the door open for more stimulus in September after full assessment of the Brexit. BOJ Kuroda rejected “helicopter money” but said other mechanisms are available. Locally, the government has continued to show its tireless efforts to speed up all infrastructure projects. Meanwhile, banks’ earnings decline in 2Q16 came in with no surprise as we expect provisioning to be front-loaded while it should level down in 2H16 and going forward along with economic recovery.

Local issue
Section 44 to help Blue Line. Prime Minister Prayut Chan-o-cha has invoked Section 44 in a bid to speed up direct negotiations between the Mass Rapid Transit Authority of Thailand (MRTA) and the operator of the Blue Line to run two extended routes (Bang Sue – Tha Phra and Hua Lamphong – Bang Khae). The move also aims to resolve 1-km Tao Pun – Bang Sue missing link. Though MRTA has yet to select the operator, it has agreed to hold negotiations with BEM. (Bangkok Post)

Comment: This would definitely benefit BEM as a prominent operator to be granted the rights to smoothly and efficiently operate the extensions.

Banking sector saw YoY earnings decline. The SET-listed banks announced 2Q16 combined net profit of Bt52.0bn, down 1.63% YoY. The decline was attributed to higher provision expense, particularly from big banks, namely BBL (Bt171.50; BUY; 16 AWS TP Bt188.00), KBANK (Bt182.00; BUY; 16 AWS TP Bt203.00), KTB (Bt16.90; BUY; 16 AWS TP Bt20.00), and SCB (Bt149.50; HOLD; 16 AWS TP Bt152.00). (SET)

Comment: This was unsurprising as we expect provision expenses to be front-loaded this year while it should level down in 2H16 onward, along with economic recovery.

TRUE (Bt9.10), who has the rights since 2014 to exclusively sell Pokemon items and develop a localized version of Pokemon video games to Thailand, plans to roll out a series of attractive data plans regarding Pokemon Go, a currently popular mobile phone game, once the company completes and releases its localized Pokemon version for the Thai market, potentially in September. TRUE optimistically expects to see a significant leap in overall mobile data usage among its customers in the final quarter this year. (Bangkok Post)

Global issues
US Treasury long-dated debt yields fell from multi-week highs on Thursday, tracking declines in US equities, as risk aversion crept back into the market. Benchmark US 10-year Treasury notes were up 5/32 in price for a yield of 1.561%, down from 1.580% on Wednesday. US 30-year bond prices were flat, yielding 2.296%. (Reuters)

The dollar slipped from a six-week high against the yen on Thursday after BOJ chief Haruhiko Kuroda said the bank saw no need to stimulate the economy with "helicopter money." Investors had been betting on an aggressive round of stimulus from next week's BOJ meeting. The yen surge as strong as ¥105.41 per dollar before settling around ¥106.42, 0.4% up on the day. (Reuters)

USA
Wall Street shares fell on Thursday, with the S&P500 and DJIA pulling back from record highs, as disappointing quarterly reports from Intel and transportation companies ceased momentum in a US corporate earnings season that so far has been better than feared. (Reuters)
 

Rising earnings expectations: 2Q16 earnings for S&P500 companies expected to fall 3.3% YoY, less severe than the 4.5% decline estimated at the start of the month and the 3.8% drop last Friday, according to Thomson Reuters I/B/E/S. (Reuters)

The US government is expected to report next week that the economy grew at a 2.6% annualized rate in 2Q16, an acceleration from the 1.1% pace logged in 1Q16. (Reuters)

US jobless claims unexpectedly fell last week, hitting a 3-month low. The initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 253,000 last week, the lowest since April. Economists had forecast initial claims rising to 265,000 last week. The number has now been below 300,000, a threshold associated with a healthy labor market, for 72 straight weeks, the longest stretch since 1973. (Reuters)

US home resales hit their highest level in nearly 9-1/2 years in June as low interest rates lured first-time buyers into the market. The National Association of Realtors said existing home sales increased 1.1% to an annual rate of 5.57mn units last month, the highest level since February 2007. It was the fourth straight month of increases and left sales 3% higher YoY. Economists had forecast sales slipping to a 5.48mn-unit pace in June. (Reuters)

Factory activity contracts, but orders surge: Factory activity in the mid-Atlantic region contracted this month. However, a surge in new orders and shipments suggested the worst of the manufacturing downturn was probably over. The Philadelphia Federal Reserve said its business index fell to a reading of -2.9 this month from 4.7 in June. The new orders sub-index rose to 11.8 this month from -3.0 in June, with shipments rebounding to 6.3 from -2.1 in June. (Reuters)

Europe
European stocks edged lower on Thursday, as a drop in the shares of major airlines, after Lufthansa issued profit warning, offset gains in some banks that were propped up by signals of support for the sector from the ECB. (Reuters)
 

The ECB kept interest rates unchanged on Thursday but left the door open to more policy stimulus, highlighting great uncertainty and abundant risks to the economic outlook. Mario Draghi noted that fresh projections, which include the economic costs of the Brexit, were needed before any decision in September. (Reuters)

Asia
BOJ Governor Haruhiko Kuroda ruled out the idea of using "helicopter money" - or directly underwriting the budget deficit - to combat deflation, as policymakers in Tokyo gear up to expand existing stimulus programs. However, he said the central bank already had mechanisms in place to ease policy further if needed, and that Japan should not forfeit a clear separation between fiscal and monetary institutions. (Reuters)
 

China's economic growth is expected to cool to 6.5% this year - the low end of Beijing's target range - even as the government steps up spending and the central bank loosens policy further to prevent a sharper slowdown, a Reuters poll showed. Growth is seen slowing further to 6.3% in 2017 from 6.9% growth in 2015. However, fears of a hard landing in China have eased. (Reuters)

Commodities
Oil prices fell 2% on Thursday, as the market took a closer look at US EIA’s data that showed growing inventories of gasoline and other oil products pushed total petroleum supplies in the US to record highs. Brent crude futures closed 97 cents (-2.1%) lower at US$46.20 a barrel. US crude futures settled down US$1 (-2.2%) at US$44.75. (Reuters)
 

Gold rebounded above a three-week low and rose 1% on Thursday, as the dollar fell and the key stock indexes hovered below record highs after the ECB left key interest rates unchanged. Spot gold gained 1.1% at US$1,329.90 an ounce. (Reuters)

Source: aws.co.th / settrade.com