Prospect of Trump-Xi trade talks revives stocks

Recap: Global stock markets rebounded strongly yesterday after US President Donald Trump and his Chinese counterpart Xi Jinping spoke by phone and reported progress in resolving trade tensions. The pair plan to talk at the G20 summit in Buenos Aires on Nov 30.

Gold prices hit a three-month high while oil moved in the opposite direction as Opec increased production capacity.

The SET index moved in a range of 1,630.79 to 1,687.76 points before closing at 1,681.84 points, up 3.2% from the previous week, in trade averaging 48.16 billion baht a day.

Retail investors were net sellers of 8.6 billion baht, while foreign investors sold 5.3 billion and brokerages 667.4 million worth of shares. Institutional investors were net buyers of 14.64 billion baht.

Newsmakers: The US has restricted American firms from selling parts to a Chinese company over national security concerns. The Commerce Department said there was a “significant risk” that Fujian Jinhua could get involved in activities that may hurt US national security.

• Britain’s Brexit minister David Davis believes a divorce deal with the EU could be struck by Nov 21, prompting EU leaders to warn this would require a breakthrough within days.
• Italy’s economy registered zero growth in the third quarter, an ominous sign as the government is arguing with the EU over the need for an expansionary budget to boost growth.
• The Bank of Japan downgraded its inflation and economic growth forecasts through fiscal 2020, putting its 2% inflation target well out of reach for the foreseeable future.
• Struggling General Electric reported a third-quarter loss of US$22.8 billion after a massive downgrade in the value of key assets, a move that sparked new scrutiny by US officials.
• The Thailand Future Fund saw its share price rise 3% on its first trading day. Officials are now studying merger between CAT Telecom and TOT Plc as an underlying asset for the fund’s third batch.
• The long-awaited land and buildings tax draft bill is expected to head to the National Legislative Assembly for a second reading in mid-November, with new property taxes scheduled to take effect in January 2020.
• Thailand’s ranking among 190 economies in the World Bank’s Doing Business 2019 report fell a notch to 27th, though its overall score improved by 1.06 points to 78.45.
• Headline inflation rose for the 16th straight month in October but slowed from September as prices of raw food, vegetables and fruits dropped.
• The Fiscal Policy Office is maintaining its GDP growth forecast at 4.5% as private consumption picks up and investment counters sagging global demand. However, the Bank of Thailand has grown more pessimistic about the 9% export growth target as trade frictions increase.
• Despite an upbeat economic growth outlook next year, Standard Chartered Bank forecasts the country’s current account surplus will narrow because of risks to tourism and an expected rise in imports.
• Thailand plans to formally apply to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership this year.
• The Office of Industrial Economics brushed aside concern over the decline in the Manufacturing Production Index in September, saying growth in the first nine months remained healthy. The index in September contracted year-on-year for the first time in 17 months, falling 2.6% to 111.2 points.
• After facing the possibility of a shortage of batteries for hybrid cars imported from Japan, Toyota Motor Thailand will accelerate the start of its battery assembly plant in Chachoengsao province to mid-2019, up from early 2020.
• The cabinet has added coconuts and coconut products to the state price-control list as part of efforts to deal with the domestic coconut price slump.
• Kasikornbank has set a target for credit cost, the percentage of loan-loss provisions to total loans, of up to 165 basis points for next year, down from up to 185 points this year, because of stable non-performing loans and improving asset quality.
• Bank of Ayudhya says it has no plans to downsize its 50% shareholding portion in Ngern Tid Lor Co Ltd, following the sale of a 50% stake to an international private equity consortium. The bank also aims for 10% growth in retail lending and hopes to keep its bad loan ratio below 2.7% next year.
• The Central Bankruptcy Court has dropped a business rehabilitation petition filed by a creditor of Inter Far East Energy Corp Plc because the creditor failed to present witnesses and provide evidence as scheduled.
• Gulf Energy Development Plc has agreed to run a power plant in Oman, the second overseas market for the Thai company.
• Magnolia Quality Development Corporation Ltd will collect a down payment of 25% of the unit price at a new luxury condo project it will launch this weekend to prepare customers for lower loan-to-value ratios on mortgage lending.
• Coming up: Japan will release monetary policy meeting minutes on Monday, with Indonesia announcing third-quarter GDP the same day. The US will also release the ISM non-manufacturing and services composite index for October.
• The Reserve Bank of Australia will announce its interest rate decision on Tuesday, and New Zealand will update employment data. China will release October trade figures and Germany will announce September trade figures on Thursday.
• The US Federal Open Market Committee will announce its rate decision at 2am Friday, Thailand time. Britain will announce preliminary Q3 GDP and trade data the same day. China will announce October inflation and new yuan loans on Saturday.

Stocks to watch: Asia Plus Securities recommends stocks that will benefit from growth prospects of the Eastern Economic Corridor (EEC) such as AMATA, WHA and EASTW.

• Maybank Kim Eng Securities Thailand recommends accumulating stocks expected to announce good Q3 earnings such as MTC, SAWAD, ROBINS, ANAN, SVI, BCH, CHG, CKP, EA, GULF, PYLON and STA. It recommends STEC, SEAFCO and AMATA as EEC beneficiaries, along with tourism-related equities CENTEL, MINT and ERW.

Technical view: Maybank Kim Eng Securities Thailand sees support at 1,645 points and resistance at 1,705. Krungsri Securities sees support at 1,650 and resistance at 1,700.