Market waits for new economic numbers and government measures; window dressing to start next week

Investors on the Stock Exchange of Thailand (SET) are waiting to see the new economic numbers from the Bank of Thailand (BOT) on Wednesday.

The BOT’s Monetary Policy Committee will provide the results of its meeting in the afternoon. Brokers believe that the committee will maintain the country’s benchmark lending rate but lower its GDP’s prediction. 

The policy interest rate now stands at 0.5 per cent while the central bank is expecting Thailand to go into a recession of at least 5.3 per cent. 

Brokers said BOT will wait to see the effects from the government’s stimulus measures first before making another cut in the third quarter if needed then. 

After the market closes, investors will keep an eye on the International Monetary Fund which is set to provide the latest outlook of the global economy.

Positive sentiments 

Avin Sony, head of Institutional Sales at Asia Plus Securities told Thai Enquirer, that the firm’s internal research shows that domestic tourism is already back to pre-COVID levels which is a boon for the hotel sector. 

In addition, the government’s 22 billion baht measures to provide discounts and cash for Thai citizens to travel within the country will start in July.

The cabinet has also approved a four-day holiday during July 4-7 on Tuesday to support the promotion.

The government is currently in talks with China, Singapore, Japan and South Korea about the “business bubble” which is expected to be approved by the Center for COVID-19 Situation Administration (CCSA) at its meeting on Friday, June 26.

Avin pointed to Minor International, which has just set its rights offerings price at 18.9 baht per share with a target to raise 10 billion baht from it, as one of the beneficiaries. 

He said the business bubble will mostly bring in foreign businesspeople which is MINT’s target customers and the scheme will also be linked to medical tourism.

In the meantime, department stores are asking for stimulus as well to help spur consumers to spend. Tax rebates and a repeat of the Taste Shop Spend program were mentioned as possibilities.

Siam Piwat Simon, which opened its premium outlet this month near Suvarnabhumi Airport, is now asking the government to allow flights from Cambodia, Laos, Myanmar and Vietnam (CLMV).  

These tourist groups also make up their core customers at their Siam Center and Siam Discovery complexes. 

Maybank Kim Eng Securities said if granted, the influx of CMLV tourism traffic could also potentially benefit Central Pattana (CPN)’s Central Village which is also near to the international airport.

ASEAN accounts for 19 per cent of international tourism revenues while CLMV accounts for about 10 per cent. 

The firm said if Thailand opens up to CLMV it should also consider opening up to Singapore and Malaysia as they are big spenders as well. 

They added that these stimulus measures and tentative, targeted opening will help cushion the downside of the retail sector.

However, they will not be enough to drive traffic back to levels that will allow rental rates to return to pre-COVID prices. 

For that, income needs to improve and that remains to be seen. 

Window dressing 

Mutual fund and other portfolio managers are expected to do a window dressing next week. This is a strategy used near the end of the year or the quarter end to improve the appearance of a fund’s performance.

Source: Maybank Kim Eng Securities

Super outperformers on the SET is now up more than 50 per cent in the first half of 2020. The relative underperformers have also increased but still remain below 30 per cent. 

For the relative under-performers list, Maybank Kim Eng’s potential rotation bets are ADVANC, BBL, TISCO, SPALI, BJC, CPALL, and KTC.  

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