Expect the SET to trade higher today trailing solid gains to record highs for the major Wall Street indexes overnight on upbeat US economic data and expectations of more stimulus from major central banks and leading governments, especially Japan’s government, BOJ, ECB and PBOC. Although the BOE surprised investors by keeping rate unchanged on Thursday, it held out the prospect of stimulus soon to help the economy cope with the Brexit. An attack in France and local factors today, which are mostly bit and piece, should not have significant impact on the market.
Local issue
Land near megaproject to face tax. Finance Minister Apisak Tantivorawong said the government is studying the possibility of generating revenue from inflated-priced and high-demand land near big-ticket infrastructure projects, particularly electric trains and rail projects, through a so-called betterment tax. The plan is set to mainly target commercial property, adding that residential owners could also be on the profit from selling their property. (Bangkok Post)
Land near megaproject to face tax. Finance Minister Apisak Tantivorawong said the government is studying the possibility of generating revenue from inflated-priced and high-demand land near big-ticket infrastructure projects, particularly electric trains and rail projects, through a so-called betterment tax. The plan is set to mainly target commercial property, adding that residential owners could also be on the profit from selling their property. (Bangkok Post)
Comment: Given the current sluggish economic conditions, we think such a restrictive fiscal policy might not be imposed in the near future, at least until long-term infrastructure investments are completed.
Amended TCG law to help SMEs. The amended draft governing Thai Credit Guarantee Corporation (TCG), which will allow the corporation to guarantee loans by non-bank institutions, is anticipated to considerably cut the interest costs for SMEs. Currently, SME operators are charged 20-30% interest per annum to secure loans from non-bank institutions. The law is expected to come into force this year. (Bangkok Post)
Comment: This marks another attempt by the state to assist SMEs, and would facilitate SMEs to have greater access to credit from non-bank institutions while enjoying low interest costs, as the loans are backed by TCG.
Global issues
The Bank of England (BOE) surprised the markets by keeping interest rates on hold on Thursday, but held out the prospect of a stimulus package soon to help the economy cope with the Brexit. Economists had mostly expected a halving of Bank Rate to 0.25% on Thursday, to be followed by a revival of the BoE's £375bn (US$499bn) bond-buying programme at its next meeting on 4 Aug. (Reuters)
US Treasuries weakened on Thursday after the BOE kept interest rates unchanged, surprising investors who had expected the first rate cut in more than seven years, and as US data showed rising inflation. Benchmark 10-year notes ended down 19/32 in price to yield 1.532%, up from 1.467% on Wednesday. (Reuters)
The yen eased versus the dollar on Friday, under pressure from improving risk sentiment and speculation that Japanese policymakers could adopt more radical monetary stimulus. The dollar edged up 0.1% to ¥105.46. The dollar has gained about 4.8% versus the yen so far this week. Sterling rose 0.5% to US$1.3415, after having risen 1.5% on Thursday as the BOE kept interest rates on hold. (Reuters)
USA
Wall Street shares firmly rose on Thursday, with the S&P500 and the DJIA continuing to record highs, after JPMorgan's strong quarterly results, while upbeat economic data reinforced expectations that the current rally can continue further. More market support came from upbeat US economic data. US jobless claims unexpectedly held steady near a 43-year low last week, while producer prices recorded their biggest gain in a year in June. (Reuters)
US jobless claims unexpectedly held at lower levels last week, pointing to further momentum in the labor market. They were unchanged at a seasonally adjusted 254,000 last week. Economists had forecast the claims rising to 265,000 last week. The claims have now been below 300,000, a threshold associated with a healthy labor market, for 71 consecutive weeks, the longest stretch since 1973. (Reuters)
PPI jumps: US producer price index for final demand rose 0.5% in June, the largest increase since May 2015, after advancing 0.4% in May. In the 12 months through June, the PPI increased 0.3%, rising for the first time since December 2014, after slipping 0.1% in May. Producer inflation is being boosted by the fading drag from a strong dollar and lower oil prices. (Reuters)
Europe
European shares slipped from a three-week high on Thursday after the BOE surprised investors by keeping interest rates on hold. The market has been recovering from a sharp, post-referendum sell-off partly on expectations of further stimulus from central banks. The previously beaten-down banking sector continued its recent upward journey. (Reuters)
European shares slipped from a three-week high on Thursday after the BOE surprised investors by keeping interest rates on hold. The market has been recovering from a sharp, post-referendum sell-off partly on expectations of further stimulus from central banks. The previously beaten-down banking sector continued its recent upward journey. (Reuters)
A truck driver killed at least 75 people and injured scores when he drove a truck at high speed into a crowd watching Bastille Day fireworks in the French Riviera city of Nice late on Thursday. (Reuters)
Asia
China's 2Q16 GDP data and economic activity indicators for June are due to be released at 0200 GMT today. China's economic growth likely slowed to a fresh 7-year low of 6.6% in 2Q16, down from 6.7% in 1Q16, according to a Reuters poll of 61 economists. That would be the weakest pace of expansion since 1Q09, when growth fell to 6.2%. (Reuters)
China and the EU agreed to establish a bilateral mechanism to deal with overcapacity in steel. China is by far the world's biggest steel producer and its annual output is almost double that of the 28-nation EU. Rival producers have accused China of selling into export markets at below cost after a slowdown in demand at home, causing a crisis for the industry that has led to job cuts and plant closures. (Reuters)
There is no chance Japan will resort to "helicopter money," a policy in which the central bank indefinitely finances fiscal spending through perpetual bonds, any time soon, Japanese government and BOJ officials said. (Reuters)
Commodities
Oil prices rose 2% on Thursday as traders covered short positions a day after crude futures were hammered after data showing weak US demand for fuel during the traditionally busy summer driving season heightened concerns about a global glut. US crude futures settled up 93 cents (+2.1%) at US$45.68 a barrel. Brent crude was up 95 cents (+2%) at US$47.21 a barrel. (Reuters)
Gold fell to a two-week low on Thursday as global equities stayed in positive territory after the BOE surprised investors by leaving interest rates unchanged. Spot gold fell by 0.8% to settle at US$1,332.10 per ounce. US gold futures settled down 0.9% at US$1,332.2. (Reuters)
Copper and some other base metal prices trimmed gains on Thursday, after the BOE failed to cut interest rates as expected, although investors still hoped for top metals consumer China to give more stimulus to its economy. Three-month copper on the LME closed up just 0.04% at US$4,940 a tonne. LME nickel ended up 0.1% at US$10,355. (Reuters)
Source: aws.co.th / settrade.com
