Traders cautious amid mixed signals from China

RECAP: Asian stocks traded cautiously on Friday after mixed readings on the health of China’s economy. The dollar traded close to an 11-week high as robust US economic data suggested the Federal Reserve need not cut interest rates too aggressively.
The SET index moved in a range of 1,461.01 and 1,506.82 points this week, before closing on Friday at 1,489.82, up 1.3% from the previous week, with daily turnover averaging 66.04 billion baht.
Institutional investors were net buyers of 4.99 billion baht, followed by brokerage firms at 1.83 billion. Retail investors were net sellers of 6.12 billion, followed by foreign investors at 714.19 million.
NEWSMAKERS: The European Central Bank cut interest rates by a quarter point to 3.25% on Thursday, the third reduction in four months, as inflation has cooled faster than expected to 1.7%, below its 2% target for the first time in more than three years.
China’s economy grew at the slowest pace since early 2023 in the third quarter, expanding 4.6% year-on-year, official data showed on Friday.
China said on Thursday that it would almost double credit available for unfinished housing projects to 4 trillion yuan ($560 billion) in a new push to shore up the sector and reignite the economy.
The Japanese yen dropped below 150 per dollar for the first time since Aug 1, as investors perceive a slower narrowing of the yield gap between Japan and the US.
Core inflation in Japan grew 2.4% year-on-year in September, the slowest pace in five months but still above the central bank’s 2% target.
Gold topped $2,700 an ounce for the first time on Friday, climbing to $2,711.99, as concerns over escalating conflicts in the Middle East and a tight US election race prompt investors to flock to safety.
The value of the digital asset market has risen about 13% in the past seven days, well ahead of global stock gauges and gold. Some investors view the climb as a sign that markets anticipate a victory for pro-crypto Republican candidate Donald Trump in the US presidential election.
The International Energy Agency (IEA) forecasts global oil demand will increase by 900,000 barrels per day this year and by 1 million bpd next year. However, China’s oil demand fell 500,000 bpd in August, the fourth month of decline.
Global smartphone shipments grew 5% in the third quarter of 2024, driven by persistent demand in emerging economies and the start of a replacement cycle in many markets, underpinning a recovery after a prolonged slump.
Visitor spending in Japan in the first 9 months of this year broke the full-year record set in 2023, reflecting a tourism boom fuelled by the weak yen. Travellers spent 5.86 trillion yen ($39.3 billion) through September, compared with 5.3 trillion yen in all of 2023.
Japan’s exports in September declined by the most since February 2021 as global demand weakened. The trade deficit in the first half of fiscal 2024 through September grew 14.4% as a weak yen inflated the value of imports.
The International Monetary Fund warns global public debt will exceed $100 trillion for the first time this year and may accelerate faster than expected amid increased government spending and sluggish economic growth.
Russia will seek to convince Brics countries to build an alternative platform for international payments that would be immune to Western sanctions when it hosts a summit of the group’s leaders next week.
Taiwan Semiconductor Manufacturing Co (TSMC) has raised its target for 2024 revenue growth to 30% in dollar terms after quarterly results beat estimates, with a 54% rise in September-quarter net profit.
Nvidia shares surged to an all-time high of $140.77 on Thursday, reflecting significant growth for chipmaker that has been at the forefront of the AI boom.
Vietnam has estimated the cost of building a new 427km railway linking it with Yunnan province in China at $7.2 billion.
The Bank of Thailand on Wednesday cut its policy interest rate by 25 basis points to 2.25%, surprising the market. The first cut in four years is expected to ease the debt burden on borrowers while supporting business loan growth.
InnovestX Securities expects the BoT to continue cutting the policy rate to 1.50% by next year, to maintain the spread between Thai and US rates.
The Ministry of Finance will propose another package to stimulate purchasing power in the sluggish property sector, offering 55 billion baht in low-interest loans, deputy minister Paopoom Rojanasakul said on Thursday.
The Ministry of Energy plans to extend the diesel price cap of 33 baht per litre until the end of 2024, from the previous end date of Oct 31.
The Federation of Thai Industries (FTI) reported a decline in the industrial confidence index to 87.1 in September, citing factors such as flooding, weak purchasing power, high household debt and tight lending conditions.
High-end hotel operators are preparing to raise room rates during the high season as tourist numbers are projected to surge, while hotels in lower tiers continue to struggle, according to the hotel operators’ sentiment index.
The Ministry of Transport is proposing a congestion charge on drivers using main roads in Bangkok. The funds would be used to subsidise a 20-baht maximum fare on all rail mass-transit lines, and to buy concessions of operators not yet participating in the 20-baht scheme.
The new board chairman of the Bank of Thailand could be selected next month, with a second meeting of the selection committee scheduled for Nov 4, sources say. The first meeting failed to reach a conclusion amid concerns about political pressure. One of the candidates is reportedly Kittiratt Na-Ranong, a former chief economic strategist of the ruling Pheu Thai Party.
COMING UP: On Monday, Germany releases monthly producer prices. On Tuesday, the Brics summit opens in Kazan, Russia, with aspiring member Thailand in attendance, and Japan releases an inflation update. On Wednesday, The Bank of Canada announces a rate decision and the US reports existing home sales. On Thursday, the US announces manufacturing and services PMI and new home sales. On Friday, Russia announces a rate decision and the US updates durable goods orders.
Domestically, on Tuesday, JP Morgan Asset Management and Kasikorn Asset Management co-host a conference: “Know the Markets Summit 24 – Shaping the Future”.
STOCKS TO WATCH: Yuanta Securities estimates third-quarter aggregate net profit of listed companies at 240 billion baht, down 6% from the second quarter and 15% on the year, due mainly to pressures from energy prices and flood impact.
However, 5 groups are expected to show quarterly and annualised growth: commercial banks, finance, medical, food, and beverages. Sectors whose profits will slow on a quarterly basis due to the low season but grow year-on-year are retail, tourism and industrial estates. Interesting earnings season plays are SCB, CPF, CPAXT, GPSC, TIDLOR, BCH, MASTER, SYMC and KCG.
InnovestX Securities recommends earnings plays with strong fundamentals and Q3 profits, namely BEM, BCH, BDMS, GULF, TRUE, AU and TNP. Stocks with high dividend yields and expected to be targets of Vayupak and tax-deductible funds are KTB, BBL, ADVANC and HMPRO.
TECHNICAL VIEW: CGS International (CGSI) sees support at 1,480 points and resistance at 1,520. Aira Securities sees support at 1,470 and resistance at 1,520.