Thai shares are poised to trade in a narrow range today after Wall Street showed signs of losing steam following a record run last week. The focus now shifts to 2Q16 earnings season in the US and here with less earnings contraction expected in the US than in 1Q16 and a slight slowdown forecast in growth QoQ for Thai listed companies. Anything better than the consensus forecasts will propel Wall Street to move up further. Market players are waiting for stimulus measures from the Japanese government, BOJ, ECB, and PBOC. Locally, the government has continued its efforts to make most of its infrastructure investment projects materialize. Almost all 20 mega projects have been confirmed to be signed by this year.
Local issue
Megaproject contracts to be signed this year. Finance Minister Apisak Tantiworavong affirmed that contracts for almost all 20 of the government’s infrastructure investments will be signed by this year, with only one or two projects, such as the double-track railway venture between Thailand and Japan, failing to be settled this year. The Minister also said construction can commence accordingly after the contracts are signed, and it would result in around Bt66bn spent on these projects in 2016 while the rest is spent over the next 3 years. (Bangkok Post)
Megaproject contracts to be signed this year. Finance Minister Apisak Tantiworavong affirmed that contracts for almost all 20 of the government’s infrastructure investments will be signed by this year, with only one or two projects, such as the double-track railway venture between Thailand and Japan, failing to be settled this year. The Minister also said construction can commence accordingly after the contracts are signed, and it would result in around Bt66bn spent on these projects in 2016 while the rest is spent over the next 3 years. (Bangkok Post)
Comment: The state’s plans are on track and the investments will act as a key catalyst to boost the overall economy.
Land around railway projects to be urgently developed. Deputy Prime Minister Somkid Jatusripitak has demanded the Transport Ministry finish drawing up plans within one month to commercially develop areas around high-speed railway projects, including routes from Bangkok to Nakhon Ratchasima, from Bangkok to Rayong, from Bangkok to Hua Hin, the Bangkok-Chon Buri Laem Chabang section, and a southern rail corridor. (Bangkok Post)
Ambitious plan on R&D spending by 2036. The state has set a plan to gradually raise domestic spending on research and development (R&D) to 4% of GDP, relatively the same level as developed countries, by 2036. Such spending will be mainly focused on competitiveness enhancement, social issues, and improving people’s life quality. Currently, R&D spending only accounts for 0.5% of Thailand GDP. (Bangkok Post)
Global issues
Brexit spurs IMF GDP downgrade, bright spots return: The IMF cut its global growth forecast by 0.1 percentage points both in 2016-17 to 3.1% and 3.4% respectively. The fund said it would have revised up global growth forecast if not for Brexit thanks to Eurozone and Japan economic improvement. The fund sees reduced investment due to Brexit uncertainties. Japan’s 2017 economic outlook is now positive while Brazil and Russia both should return to growth. (Reuters)
Brexit spurs IMF GDP downgrade, bright spots return: The IMF cut its global growth forecast by 0.1 percentage points both in 2016-17 to 3.1% and 3.4% respectively. The fund said it would have revised up global growth forecast if not for Brexit thanks to Eurozone and Japan economic improvement. The fund sees reduced investment due to Brexit uncertainties. Japan’s 2017 economic outlook is now positive while Brazil and Russia both should return to growth. (Reuters)
US Treasury prices gained on Tuesday as risk appetite waned following declines on Wall Street, hurt by the drop in oil prices as well as soft investors’ sentiment data in Germany. Benchmark US 10-year Treasury notes were up 8/32 in price for a yield of 1.557%, down from 1.587% on Monday. (Reuters)
The dollar rose to a four-month high against a basket of major currencies on Tuesday after the release of data showing US housing starts rose by more than expected in June. The dollar index rose to 97.125, its highest level since mid-March. (Reuters)
USA
Wall Street shares closed mixed on Tuesday with the S&P500 pulling back from record highs but the DJIAs edging higher for an eighth straight day of gains. Investors digested a mixed bag of earnings reports amid lowered expectations for global economic growth by the IMF. (Reuters)
US housing starts rose more than expected in June as construction activity increased broadly, but downward revisions to the prior months' data pointed to a sector treading water in 2Q16. Groundbreaking surged 4.8% to a seasonally adjusted annual pace of 1.19mn units. Starts for April and May were revised lower. Economists had forecast housing starts rising to a 1.17mn-unit pace in June. (Reuters)
The Atlanta Federal Reserve left its 2Q16 GDP growth forecast at a 2.4% annualized rate after the housing starts report. The economy grew at a 1.1% pace in 1Q16. (Reuters)
Europe
European shares slipped to a one-week low on Tuesday primarily on concerns about corporate earnings outlook and miners tracking weaker metals prices. Banks were also under pressure after a ruling by the European Court of Justice that EU member states were obliged to make shareholders and junior creditors pay before intervening to rescue a bank. (Reuters)
European shares slipped to a one-week low on Tuesday primarily on concerns about corporate earnings outlook and miners tracking weaker metals prices. Banks were also under pressure after a ruling by the European Court of Justice that EU member states were obliged to make shareholders and junior creditors pay before intervening to rescue a bank. (Reuters)
German investors’ sentiment dropped as the impact of Brexit is felt: ZEW said Germany economic confidence dropped 6.8 in July from 19.2 in June, versus a 9.0 gain consensus forecast. The current condition index, which reflects investors’ sentiment, fell to 49.8 in July from 54.5 in June, versus 51.8 consensus forecast. (Reuters)
Asia
Japan prepares for aggressive stimulus: Japanese policymakers, who will not go as far as funding government spending through direct debt monetisation, is likely to pursue a mix of aggressive fiscal and monetary expansion to battle deflation. With PM Shinzo Abe preparing a big spending package to be announced as early as this month, the BOJ will remain under pressure to expand monetary stimulus at its rate review on 28-29 Jul. (Reuters)
Japan prepares for aggressive stimulus: Japanese policymakers, who will not go as far as funding government spending through direct debt monetisation, is likely to pursue a mix of aggressive fiscal and monetary expansion to battle deflation. With PM Shinzo Abe preparing a big spending package to be announced as early as this month, the BOJ will remain under pressure to expand monetary stimulus at its rate review on 28-29 Jul. (Reuters)
IMF sees better Japan economic outlook in 2017: The IMF has cut 2016 GDP growth forecast for Japan to 0.3% from 0.5% in its previous forecast but raised the forecast for 2017 to 0.1% growth from a 0.1% contraction. (Reuters)
IMF raises China growth forecast: The IMF has raised its 2016 GDP growth forecast for China to 6.6% from 6.5% in its previous forecast but maintained the forecast for 2017 at slower 6.2% growth. (Reuters)
Commodities
Oil prices slipped on Tuesday as a rallying dollar and a global fuel glut offset forecasts for a ninth straight weekly drop in US crude stockpiles. Brent crude futures were down 20 cents at US$46.76 barrel, after trading as high as US$47.49. US crude futures slid by 40 cents to US$44.84, after a session high at US$45.67. (Reuters)
Gold cut some earlier gains on Tuesday, as the dollar hit a four-month high after data showed a surge in US housing starts in June, although weaker equities provided support. Spot gold was up 0.2% at US$1,328.62 an ounce, having earlier reached a session high of US$1,334.88. US gold dropped 0.1% to US$1,328.70 an ounce. (Reuters)
Base metals rose: Concerns over a Philippines mining crackdown sent nickel prices near their highest in nearly 10 months on Tuesday, while zinc hit a 14-month top on worries over falling mine output. LME zinc hit the highest since May last year at US$2,248 a tonne. It ended up 1% at US$2,241, while nickel ended up 0.2% at US$10,570, near last week's 10-month peak. (Reuters)
Source: aws.co.th / settrade.com
