Asian stocks rallied on Friday as investors returned to risk assets following encouraging US jobs and retail sales figures that alleviated recession fears.
The Thai index climbed back above 1,300 points after Paetongtarn Shinawatra was confirmed as the new prime minister, just two days after the Constitutional Court disqualified Srettha Thavisin from office.
The SET index fluctuated between 1,279.34 and 1,306.88 points this week, closing yesterday at 1,303.00, marking a 0.5% increase from the previous week. Daily turnover averaged 40.38 billion baht.
Brokerage firms were net buyers of 1.72 billion baht, followed by retail investors at 1.17 billion and foreign investors at 95.22 million. In contrast, institutional investors recorded net sales of 2.98 billion baht.
US consumer inflation for July rose by 2.9% year-on-year, the lowest increase since March 2021 and below market expectations. The Producer Price Index increased by 2.2%, also falling short of forecasts, fueling optimism that the Federal Reserve may consider a half-percentage point cut in its policy rate in September.
US retail sales for July rose by 1% from June, surpassing expectations. Initial jobless claims came in lower than anticipated, indicating a “gradual” slowdown in the labor market, which may convince the Fed that a 25 basis point rate cut would suffice.
Concerns are mounting over China’s first contraction in bank loans in nearly two decades, suggesting its economy might be facing a “balance sheet recession,” similar to Japan’s experience decades ago. A significant drop in new corporate borrowing, coupled with households focusing on debt repayment, led to a decrease in bank loans last month.
The MSCI continues to cut Chinese stocks from its indices, potentially leading to a further decline in China’s representation within a key emerging-market equity benchmark. This month, the index provider announced the removal of 60 stocks from the MSCI China Index, following 56 deletions in May and 66 in February.
The International Energy Agency anticipates an oil market surplus next year, driven by increased production in North America, Brazil, and Guyana, despite OPEC and its allies implementing production cuts.
In China, consumer inflation rose by 0.5% year-on-year in July, influenced mainly by soaring pork prices, marking its highest increase since February. In contrast, producer prices fell by 0.8% due to declining construction material costs.
China’s steel production in July decreased by 9% year-on-year to 82.94 million tonnes, reflecting weak demand that has necessitated substantial production cuts in the industry.
Sea Ltd, the parent company of Shopee, reported second-quarter earnings that exceeded analysts’ estimates, driven by continued online shopping interest. Sales climbed by 23% to $3.8 billion, surpassing expectations.
Apple supplier Foxconn announced a 6% increase in its second-quarter net profit, supported by robust demand for AI servers.
Malaysia’s economy grew by 5.9% year-on-year in the second quarter, up from 4.2% in the first quarter, boosted by stronger household spending, exports, and investment.
The central bank of the Philippines has cut interest rates for the first time in nearly four years to 6.25%, as policymakers seek to support economic growth.
The Reserve Bank of New Zealand lowered its benchmark interest rate by 25 basis points to 5.25%, marking its first cut in four years and indicating potential further reductions in the near future.
Japan’s GDP grew at an annualized rate of 3.1% in the second quarter, significantly exceeding the consensus estimate of 2.3%, following a 2.3% contraction in the first quarter.
The eurozone’s GDP rose by 0.3% in the second quarter, meeting market expectations, while the UK’s GDP increased by 0.6% in the second quarter, following a 0.7% growth in the first quarter.
Huawei is preparing to launch its self-developed AI chip, the Ascend 910C, in October to compete with Nvidia’s H100.
Chinese e-commerce giant Alibaba reported a 29% decline in quarterly profits for the three months ending in June as it faces sluggish consumer demand.
Paetongtarn Shinawatra, daughter of former premier Thaksin Shinawatra, was elected Thailand’s 31st prime minister on Friday, shortly after the Constitutional Court disqualified Srettha Thavisin over an ethical breach.
Srettha’s exit necessitates the formation of a new cabinet, leading some observers to speculate that the proposed 10,000-baht digital wallet stimulus may be at risk. However, caretaker deputy finance minister Julapun Amornvivat affirmed that the Pheu Thai Party remains dedicated to advocating for its key economic plan.
The Ministry of Finance stated it would continue with its original plan to sell Vayupak Fund 1 units to general investors, with an investment value of 100-150 billion baht, and an initial allocation of 30% targeted at retail investors at a unit price of 10 baht.
The industrial sentiment index rose for the first time in four months, increasing from 87.2 in June to 89.3 in July, thanks to stronger domestic demand, budget spending, and tourism.
Thai food exports in the first half of the year reached 852 billion baht, reflecting a 9.9% increase, driven by rising global demand for Thai products and decreasing costs of several key raw materials. The National Food Institute has projected an 8.8% full-year growth, anticipating total exports to reach 1.6 trillion baht.
Most SET-listed real estate companies have reported declining profits in the first half of the year, primarily due to reduced purchasing power, high household debt, elevated interest rates, and a sluggish economic recovery impacting home-buying sentiment.
The hybrid electric vehicle (HEV) market in Thailand is expected to expand as automakers reveal investment plans, with the Chinese-Thai joint venture SAIC Motor-CP and MG Sales (Thailand) announcing intentions to produce HEVs under the MG brand in Chon Buri by 2025.
Looking ahead, the People’s Bank of China will announce its five-year loan prime rate on Monday, followed by eurozone and Canadian consumer inflation updates, as well as Japanese trade figures on Tuesday. On Wednesday, the US will release crude oil inventory data and Federal Open Market Committee meeting minutes, while Japan will report services PMI. Thursday will feature US manufacturing PMI and existing home sales figures, along with Japan’s inflation update. Finally, Friday will see US new home sales data and Singapore’s inflation report.
Domestically, the National Economic and Social Development Council will release official second-quarter GDP figures and discuss the economic outlook for the second half.
Yuanta Securities recommends growth stocks with consistent dividends to enhance market stability, favoring large-cap stocks with strong dividends and high ESG ratings ahead of the new Vayupak Fund listing. Top picks include ADVANC, CPALL, KTB, PTT, SCB, and SCC.
Thanachart Securities advises investors to focus on stocks with solid fundamentals such as DELTA, TRUE, CPALL, AOT, MINT, BH, WHA, AMATA, COM7, and SISB. Kingsford Securities suggests support at 1,280 points and resistance at 1,320. Globlex Securities agrees, also projecting support at 1,280 points and resistance at 1,320.
