Thai shares are poised to trade lower today tracking losses on global bourses as doubts over whether the BOJ will stop short of enhancing its bond buying scheme and let fiscal policy stimulate their economy might trigger the end of the bull run in prices of sovereign bonds. If other central banks follow suit asset price inflation will slow. Locally, the Cabinet approved more financial schemes to support and help low income people and SMEs which should have limited impact on market sentiment. Meanwhile, Thai people are braced for the charter referendum on Sunday.
Local issue
Financial aid to low-income earners approved. The cabinet yesterday gave a nod on new financial packages worth Bt20bn through the Government Savings Bank (GSB). One of the packages includes the aid to low-income earners, such as independent business owners and small community enterprises, which will be entitled to borrow Bt50,000 each with no interest for the first year and interest of 1% in the second to fifth year. (Bangkok Post)
Financial aid to low-income earners approved. The cabinet yesterday gave a nod on new financial packages worth Bt20bn through the Government Savings Bank (GSB). One of the packages includes the aid to low-income earners, such as independent business owners and small community enterprises, which will be entitled to borrow Bt50,000 each with no interest for the first year and interest of 1% in the second to fifth year. (Bangkok Post)
Comment: We reckon this would not significantly affect MTLS (Bt18.90; BUY; 16 AWS TP Bt26.00) and SAWAD (Bt37.75; BUY; 16 AWS TP Bt57.00) as there is still large demand for financing out there in a large untapped market. Further, their target customers are typically those who have no access to financial services from commercial banks.
New soft loans packages to SMEs. The Thai Bankers Association (TBA) approved Bt10bn in soft loans for SMEs as a part of the Pracha Rat initiative in order to relieve their financial liquidity problems amidst a sluggish economy. These new soft loans will charge a fixed interest rate of 4% per year for the first two years and then the minimum retail rate throughout the remaining term. The scheme will commence from 15 Aug onwards. (Bangkok Post)
Comment: The four big banks, BBL (Bt165.50; BUY; 16 AWS TP Bt188.00), KBANK (Bt191.00; BUY; 16 AWS TP Bt203.00), KTB (Bt17.20; BUY; 16 AWS TP Bt20.00), and SCB (Bt155.00; BUY; 16 AWS TP Bt179.00), are expected to lend a significant amount through this scheme, which should simultaneously benefit their loan growths in 2H16.
NBTC plans to auction 11 telecom licences in next 5 years for four spectra: 2.6 gigahertz, 1,800 megahertz, 850 MHz and 700MHz. NBTC said that no less than 70MHz of the 190MHz of the 2.6GHz spectrum would be reallocated for mobile communications by 2017. (The Nation)
Comment: We believe that the auction would not happen until late 2017. Before then DTAC (Bt31.75, Hold, AWS 16TP Bt31.00) will suffer the most from prolonged spectrum allocation since it lost in both 1800 MHz and 900MHz auctions.
Passenger boom in 1H16. Combined passengers in the first half of the year soared by 12.5% YoY to 61.07mn, according to figures compiled by Airports of Thailand Plc, boosted by overseas tourism sector along with improved stability in country. (Bangkok Post)
Comment: The government should accelerate the expansion of the domestic airport infrastructure, particularly Suvarnabhumi Airport Phase 2, to serve rising passenger demand.
Global issues
Fears of BOJ stops bond buying: Japanese bonds have suffered their worst sell-off in more than three years on Tuesday as investors feared the BoJ might stop further bond buying scheme and leave it to fiscal policy to stimulate the economy. (Reuters)
US Treasury yields rose on Tuesday after Japan unveiled fiscal stimulus measures, dampening demand for US government debt and sending long-dated US yields to their highest levels in more than a week. US 30-year yields rose the most among US Treasuries and hit 2.332%, their highest since 21 Jul, before pulling back. US 30-year yields were last at 2.300%. Benchmark 10-year yields hit a six-day high of 1.573%, but were last at 1.544%. (Reuters)
The dollar dropped to a six-week low against a basket of currencies on Tuesday, pressured by expectations the Federal Reserve would delay raising interest rates after last week's soft US growth data. The dollar index fell 0.7% to 95.048, after earlier sliding to 95.0031, the lowest level since 24 Jun. (Reuters)
USA
Wall Street stocks fell on Tuesday, with each of the major indexes notching their worst day in about a month, as last week's soft US GDP data still spurred concerns about growth and another drop in US crude below US$40 a barrel weighed on sentiment. Investors seemed to shrug off strong consumer data and auto sales. (Reuters)
Wall Street stocks fell on Tuesday, with each of the major indexes notching their worst day in about a month, as last week's soft US GDP data still spurred concerns about growth and another drop in US crude below US$40 a barrel weighed on sentiment. Investors seemed to shrug off strong consumer data and auto sales. (Reuters)
Most 2Q16 results so far beat expectations: Of the 353 companies in the S&P 500 that have reported earnings through Tuesday morning, 71% have topped analyst expectations, according to Thomson Reuters data. Earnings for 2Q16 are expected to show a decline of 2.6%, an improvement from the expected 4.5% decline on 1 Jul. (Reuters)
US consumer spending rose more than expected in June, suggesting strength that appeared to be sustained early in 3Q16 with auto sales surging to an eight-month high in July. Consumer spending increased 0.4% MoM in June after a similar gain in May. Economists had forecast consumer spending advancing 0.3%. (Reuters)
Auto sales surged to a 17.88mn-unit annual rate last month, the highest since November 2015, from a 16.74mn-unit pace in June, according to data from Autodata. Analysts had expected sales to increase to a 17.3mn unit rate. The rebound in auto sales came despite General Motors reporting a 2% drop and Ford Motor reported a 3% decline in sales last month. (Reuters)
There was little sign of inflation in June. The personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, rose 0.1% in June after a 0.2% gain in May. In the 12 months through June the core PCE increased 1.6%. It has risen by the same margin since March. The core PCE is the Federal Reserve's preferred inflation measure and is running below the US central bank's 2% target. (Reuters)
Europe
European shares hit a two-week low on Tuesday following poor results from some firms and another day of weak performance for the banking sector. Investors are worried about banks’ capital position after last week's EU bank stress tests and their earnings in a negative interest rate environment. (Reuters)
European shares hit a two-week low on Tuesday following poor results from some firms and another day of weak performance for the banking sector. Investors are worried about banks’ capital position after last week's EU bank stress tests and their earnings in a negative interest rate environment. (Reuters)
Asia
Japanese PM Shinzo Abe's cabinet approved ¥13.5tn (US$132bn) in fiscal measures on Tuesday even as the central bank fought market speculation that it is preparing to put the brakes on monetary stimulus for the world's third-biggest economy. The government's package includes ¥7.5tn in spending by the national and local governments, and earmarks ¥6.0tn from the Fiscal Investment and Loan Program, which is not included in the government's general budget. The package's headline figure is ¥28.1tn, but it includes public-private partnerships and other amounts that are not direct government outlays and thus might not give an immediate boost to growth. (Reuters)
China home prices are still rising rapidly in most larger cities, but may have peaked in the high-flying southern city of Shenzhen. Prices of new homes in 100 cities rose 12.39% YoY in July, faster than the pace in June. The average home price was 12,009 yuan (US$1,807) per square metre in July across the 100 cities, up 1.63% MoM, compared with a 1.32% increase in June. But in Shenzhen, where the cost of homes have risen the fastest in the country this year, prices peaked at 69,843 yuan (US$10,509.03) per square metre in the first week of the month, then fell over 27%. (Reuters)
Commodities
US crude oil fell on Tuesday to end below US$40 a barrel for the first time since April as persistent worries of both a crude and refined fuel glut and a slide in US equities offset an early boost from a weak dollar. US crude futures settled down 55 cents (-1.4%) at US$39.51 a barrel. Brent crude fell 34 cents (-0.8%) to settle at US$41.80. (Reuters)
US crude oil fell on Tuesday to end below US$40 a barrel for the first time since April as persistent worries of both a crude and refined fuel glut and a slide in US equities offset an early boost from a weak dollar. US crude futures settled down 55 cents (-1.4%) at US$39.51 a barrel. Brent crude fell 34 cents (-0.8%) to settle at US$41.80. (Reuters)
Gold rose to a four-week high on Tuesday as European and US shares fell and the dollar hit its lowest in over a month after last week's soft US growth data dented expectations for a near-term interest rate hike. Spot gold was up 0.9% at US$1,365.09 an ounce. US gold futures for December delivery settled up 1% at US$1,372.60. (Reuters)
Source: aws.co.th / settrade.com
