The Stock Exchange of Thailand (SET) Index is expected to fluctuate between 1,650 and 1,670 points on Tuesday as the latest round of peace talks between Russia and Ukraine have not reached a conclusion, Krungsri Securities said.
It added that the index would be affected by investors delaying trades to follow the US Federal Reserve’s decision on whether to raise the interest rate at its meeting on Tuesday-Wednesday.
“Meanwhile, the sharp fall in the oil price and China’s move to lock down Shenzhen city to curb Covid-19 for a week would pressure the index,” Krungsri Securities said.
It recommends the purchase of the following as an investment strategy:
• KBANK, BBL, TTB, KTB and BLA will benefit from news of US interest rate hike.
• PSL and TTA will benefit from the rising freight rate.
• GSPC, BGRIM, SCGP, GULF and EPG will benefit from falling oil prices.
The SET Index closed at 1,660.15 on Monday, up 2.14 points or 0.13 per cent. Transactions totalled Bt65.21 billion with an index high of 1,662.66 and a low of 1,651.90.
The baht opened at 33.44 to the US dollar on Tuesday, weakening from Monday’s close of 33.38.
Krungthai Bank market strategist Poon Panichpibool predicted the Thai currency would move between 33.35 and 33.50 during the day.
Poon said the Thai currency could weaken further but the fall would slow and cause the baht to swing sideways as hope emerges over peace talks between Russia and Ukraine. He noted that investors did not rush to sell risk assets even after recent negotiations failed.
He added that foreign investors’ moves for Thai assets will be an important factor in setting the baht’s direction. He explained that foreign investors are returning to Thai stocks but still selling short-term bonds. However, Poon said these sales might decrease as foreign investors had already halted speculation in the baht. If the war does not worsen, foreign investors would pile back in on Thai stocks.
Poon forecast a baht resistance level of 33.50, which would see exporters selling the dollar, and a key support level of 33.00 to 33.20, when importers would buy dollars.
The Russia-Ukraine war has forced markets into a risk-off state, which means they will remain volatile. Poon said business operators should use hedging tools such as options to manage risks.
Total trade with neighbouring countries, including cross-border trade in January came in at 141.07 billion baht, up 9.49 per cent year on year, the Commerce Ministry reported on Monday.
However, Commerce Minister Jurin Laksanawisit said he has asked the Agriculture and Foreign ministries to follow up on fruit exports to China.
He said China is a large market for Thai fruits, but its zero-Covid policy is far too strict, especially in terms of land transportation.
“Apart from implementing strict measures before closing containers, we have also asked for a special route to be set up to move Thai fruits to China. The Agriculture and Cooperatives Ministry will be responsible for this issue,” he said.
“The Commerce Ministry, meanwhile, will implement proactive measures to manage fruit supply this year.”
Jurin added that his ministry will accelerate the reopening of borders and will negotiate new routes for trade.
“The China-Laos railway will serve as another route for Thai exports in the future,” he said.
Thailand’s trade with neighbouring countries in January came in as follows:
Permanent secretaries of the Agriculture and Commerce ministries will meet on Tuesday to seek compromise over the soaring price of corn, which is driving up animal-feed costs, Commerce Minister Jurin Laksanawisit said on Monday.
Corn is a key raw material in manufacturing animal feed but Jurin said the price has risen from Bt6-Bt8 per kilogram to about Bt11-Bt12, putting livestock farmers under pressure.
“Corn farmers are happy but those who raise animals are not because their costs have increased,” he added.
The permanent secretaries will seek a solution that will please both corn farmers and livestock farmers.
“The meeting will discuss all the facts regarding animal feed manufacturing, including costs. They will also discuss measures to bring down the cost of raising livestock,” Jurin said.
The minister noted that corn is one of three main raw materials in animal feed, the other two being wheat and dried fish.
He said the price of wheat is surging because Ukraine, a major exporter, has halted exports of the crop following the invasion by Russia late last month.
The Thai government has asked China for permission to ship Thai durians on the high-speed train to Kunming without being stopped for Covid checks midway, a government spokeswoman said.
Deputy government spokeswoman Rachada Dhnadirek said the Thai side had proposed to China during a recent meeting that Thai fruits and durians should be allowed to be shipped on the high-speed train and cargo containers should be closed at the Laos railway station.
The Thai side asked China to exempt Thai fruit from being checked again at the Mohan border gate and instead allow them to be transported non-stop to the destination station in Kunming.
The government spokeswoman said Thailand expects the request to be approved, and implementation should begin this month.
She said that during the negotiations, the Thai side also asked China to exempt Thai durians shipped by Covid-free-certified exporters from strict Covid checking at the four border gates of Mohan, Youyiguan, Pingxiang, and Dongxiang.
Currently, Chinese authorities are strictly checking all fruit containers entering the country at the four border checkpoints in line with its zero-Covid policy. The checking delays the shipments and sometimes results in some fruits going rotten.
Rachada said the Thai government asked Beijing to give privileges to durian exporters with GMP-Plus and Covid-free certificates. She said so far only 400 durian exporters have received training and earned the GMP (Good Manufacturing Practices)-Plus and Covid-free certificates.
The spokeswoman said exporst of fruit to China have been affected by China’s zero-Covid policy and several ministries have been trying to hold talks with China so that fruit shipped from Thailand do not get damaged in the long checking process of Chinese authorities.
“The government has never ceased its efforts to solve issues related to the shipping of fruit to China since the Covid-19 pandemic began,” Rachada said.
“The Agriculture, Commerce and Foreign ministries are joining hands to coordinate with China to solve the issue of bottlenecks at Chinese checkpoints.”
She added that the Thai side had also proposed to China to hold a joint meeting between Thailand, China, Laos and Vietnam to settle on a common protocol for speeding up fruit exports and imports.
The Thai side would propose a green lane at each border checkpoint to speed up clearance of fruit to avoid damage, she added.
She said the exports of fruit were valued at Bt91 billion in 2020 and the value increased to Bt160 billion in 2021 because the government has been trying to solve all issues related to Covid restrictions.
The spokeswoman added that the Agriculture and Commerce ministries are now eyeing fruit markets in the Middle East, such as in Saudi Arabia and the United Arab Emirates.
Last week, Agriculture Minister Chalermchai Sri-on held a meeting with the UAE trade minister to allow Thailand to export more agricultural products and foods to the Middle East country, the spokeswoman added.
Fitch Ratings, an international credit rating and research company, said many Thai firms are on the road to recovery this year.
Lertchai Korcharoenrattanakul, senior director of Fitch Ratings’ industries credits rating division, said at an online seminar last week that these firms were showing signs of recovery due to several factors.
He said the recovery could mainly be attributed to the cautious, step-by-step reopening of the country after the Covid-19 pandemic.
However, he said, hotel, aviation and retail businesses that have borne the brunt of the pandemic and restriction measures would take far longer to recover.
Also, he said, rising energy prices would continue adding pressure on the profits and growth of businesses that are not related to energy and electricity generating.
Lertchai said most Thai firms rated by Fitch have been cautious with their cash management and expansion. He said companies have borrowed more money to buy back shares or to buy shares in carbon-credit businesses, resulting in a high-debt ratio.
He added that negative ratings of many companies reduced and positive ratings rose in 2021.
The Stock Exchange of Thailand (SET) Index is expected to rise to between 1,665 and 1,670 points on Monday in response to positive developments in the Russia-Ukraine conflict, Krungsri Securities said.
However, it forecast the index will be pressured by the falling crude oil price and mass sell-offs of shares to manage risk from the US Federal Reserve meeting on Tuesday and Wednesday (March 15-16).
“The Fed is expected to raise the interest rate to deal with inflation,” Krungsri Securities explained.
It recommended the purchase of the following as an investment strategy:
• KBANK, BBL, TTB, KTB and BLA will benefit from news of US interest rate hike.
• PSL and TTA will benefit from the rising freight rate.
• GSPC, BGRIM, SCGP, GULF and EPG will benefit from falling oil prices.
The SET Index closed at 1,658.01 on Friday, up 10.93 points or 0.66 per cent. Transactions totalled 78.49 billion baht with an index high of 1,659.67 and a low of 1,637.93.
The baht opened at 33.30 to the US dollar on Monday, unchanged from Friday’s closing rate.
The Thai currency is expected to move between 33.20 and 33.40 during the day and between 33.00 and 33.50 during the week, Krungthai market strategist Poon Panichpibool said.
Poon said the baht is likely to fluctuate in a wide range and could continue to weaken if foreign investors sell Thai assets due to the Ukraine-Russia war.
However, he predicted the baht would not weaken much as foreign investors had already halted speculation that saw them sell Bt60 billion in short-term bonds at the start of the conflict. If the war does not worsen, the baht will be supported by a weakening dollar and gold-selling, he added.
Poon forecast a baht resistance level at 33.40 to 33.50, which would see exporters selling the dollar. He saw its key support level as 33.00, when importers would buy dollars.
Poon speculated that the war might support further demand for dollars as the so-called safe haven currency. However, the dollar might weaken if the US Federal Reserve does not increase the interest rate as quickly as the market expects, he added.
The Fed signalled via its “dot plot” that it will increase the interest rate only six times this year and next. As such, Poon said the dollar’s upside might be limited once the Fed’s monetary policy becomes clear.
The Customs Department said its revenue has risen 6 per cent in the first five months of the fiscal year 2022 from the same period last year.
Revenue rose to Bt8.8 billion from October 2021 to February but was 0.5 per cent below the target, department director-general Patchara Anuntasilpa said. The target for the full year is Bt100 billion.
Patchara said fallout from the Russia-Ukraine war was unlikely to hit customs revenue hard.
“Although air freight may be affected by the war, the impact will not be high,” he said.
Regarding new tariff rates on imported parts for electric vehicle (EV) production, Patchara said his department would talk with the Office of the Board of Investment to avoid redundancies in tax privileges. He explained that makers of battery electric vehicles (BEVs) already enjoy tax privileges from the BOI. The tax exemption for BEV manufacturers would not affect Customs revenue much, while the country would stand to gain from domestic production of BEVs, he said.
He added that the department was seeking to finalise the import tax rate for battery vehicle manufacturers this year.
The BOI has already offered BEV manufacturers corporate tax exemption for eight years and more tax privileges if they invest in BEV research and developments in the Kingdom.
Prime Minister Gen Prayut Chan-o-cha has ordered government agencies to find ways of softening impacts on the public of soaring energy prices and present them at Tuesday’s Cabinet meeting.
The move comes after Prayut met for talks with Energy Minister Supattanapong Punmeechaow and economic advisers on Friday afternoon, said government spokesman Thanakorn Wangboonkongchana.
The Russia-Ukraine war has driven up energy prices, pressuring the retail price of oil and LPG and threatening to deepen Thailand’s inflation woes.
After meeting with the PM, Supattanapong said the price of liquefied petroleum gas (LPG) will be raised by 1 baht per kilogram for a 15kg canister from April 1.
However, the government will cap the price of diesel at Bt30 until the end of May.
The price of a barrel of oil hit a 14-year high of US$180 on Wednesday but had fallen back to around $110 by Sunday (March 12).
The PM also heard from economic advisers about progress on bilateral trade and investment with Saudi Arabia after relations between the two countries were restored in January.
Thailand and Saudi Arabia have so far discussed investment in oil refineries, petrochemicals, electric vehicles (EVs), biofuel, biochemicals, video games and entertainment industries. The government expects these investment projects to start taking shape from April, according to Thanakorn.
Prayut also acknowledged progress in luring investment via promotions for Thailand’s new S-curve target industries, including manufacturing of EVs, electronics and pharmaceuticals, added the spokesman.
The minister noted that corn is one of three main raw materials in animal feed, the other two being wheat and dried fish.
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