The SET Index Continues To Slide As Investors Unimpressed With Earnings Results

Witawat (Ed) Wijaranakula, Ph.D.
Fri Apr 28, 2017

Related Ticker: iShares MSCI Thailand Capped ETF (NYSEARCA:THD)

The SET index lost 0.24% for the week, to close on Friday at 1,566.32, as investors continued to sell some big bank stocks, including Siam Commercial Bank PCL (SET:SCB) and Kasikornbank PCL (SET:KBANK), down 2.5% and 2.12%, respectively, after they reported mixed quarterly earnings results last week. Total Access Communication PCL (SET:DTAC) shares lost another 1.78% this week, following revenues and earnings that missed analysts' expectations last Thursday.

Siam Cement PCL (SET:SCC) shares dropped 1.11% for the week, despite that the company said its first-quarter 2017 earnings per share came in at 14.5 baht vs. 10.63 baht estimate, on revenues of 116.27 billion baht vs 111.84 billion baht estimate. PTT Exploration and Production PCL (SET:PTTEP) managed to gain 1.57% this week, after announcing on Thursday that its earning results for the first-quarter 2017 were well above expectations, according to Thomson Reuters.

Unimpressive earnings results have been a problem for the SET index performance so far this year. The SET index is now bouncing along the trendline support and may be facing real trouble if it can't break out the 1,572 level soon. Technically, the symmetrical chart pattern will end by mid-May, when investors will have to make a decision whether they will hang on or bail out.

The Bangkok Post reported on Monday that Thai exports rose sharply by 9.2% year-on-year in March, with total shipments in the first-quarter up by 4.9%, the highest quarterly growth in four years. Imports in March also surged 19.3% from a year earlier, compared with the forecast of a 9.55% increase. The March trade surplus stands at $1.62 billion, compared with a poll forecast of $1.72 billion. The Finance Ministry of Thailand said on Wednesday that it expects the Thai economy to grow 3.6% this year, up from 3.2% last year, citing increased demand for Thai exports and government expenditures, according to the Bangkok Post.

The ECB left key interest rates on hold on Thursday, including the deposit rate at minus 0.4%, and 60 billion euros of corporate and government bond buying per month until December, inline with most analysts' expectations. The market expects ECB President Mario Draghi, however, to act after May 7, when the second round of elections in France is over. Meanwhile, the BOJ also decided to keep its policy unchanged on Thursday, as expected, meaning the short-term interest rate target at minus 0.1% and the government bond buying program at an annual pace of 80 trillion yen. Analysts believe that Governor Haruhiko Kuroda will keep the policy unchanged until his term expires next spring.

The USD/THB gained 0.67% for the week to close on Friday at 34.59 baht per dollar. The spot gold price closed down 1.61% for the week, at U.S. $1,268.30 per ounce on Friday. The U.S. dollar index, or DXY, was down 0.98% for the week, closing at 98.90 on Friday, while the Japanese yen depreciated 2.10% against the U.S. dollar at 111.44 yen. The yield of Thailand 10-year government bonds surged 3.2% for the week, to close at 2.745% on Friday. The yield spread between the Thailand 10-year bond and the benchmark U.S. 10-year Treasury Note, yielding at 2.289% on Friday, widened to 0.456 percentage points. 

The WTI crude spot price inched lower 0.58% for the week, closing at $49.33 per barrel on Friday, while the Brent crude spot price was practically unchanged to close at $51.93 per barrel, despite a bullish EIA weekly report. Traders were focusing last week on gasoline and distillate stockpiles, which rose sharply to 3.4 and 2.7 million barrels, respectively. The S&P Global Platts survey had forecasted declines of 1.1 million barrels for gasoline and 1.8 million barrels for distillates.

The EIA weekly U.S. oil inventory report on Wednesday showed that domestic crude supplies declined by 3.641 million barrels to 528.702 million barrels, excluding the Strategic Petroleum Reserve, in the week ending April 21, compared to the S&P Global Platts forecast for a stockpile decline of 1 million barrels. The American Petroleum Institute, or API, inventory data on Tuesday showed a U.S. crude inventory increase of 0.897 million barrels. 

Separately, the EIA said the weekly U.S. crude oil production increased 13,000 barrels per day, or bpd, for the week ending April 17, to 9.265 million bpd. U.S. crude oil output increased 116,000 bpd to an average of 9.251 million bpd in April, compared to a March average of 9.134 million bpd. Output has fallen just 3.64% from the peak level of 9.60 million bpd in June 2015. Houston-based oilfield services company Baker Hughes Inc. said on Friday that the U.S. oil rig count rose another 9 to 697, compared to 316, when the rig count hit the low on June 6, 2016.


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