SET Falls 4.5pts Right Off the Bat from Concerns over the State of US-China Negotiations

The SET Index fell by 4.43 points to 1,603.57 points at the opening bell on November 19, 2019, as concerns grow over the state of the U.S. and China trade negotiations, despite the report of 90-day extension for the U.S. companies to deal businesses with Huawei.

 

The extension, given on November 18, was the third time that the U.S. had allowed a temporary general export license for Huawei customers to receive support for their devices. The original order for the extension in May gave a 90-day license and then extended for another 90 days after that.

However, the concerns over the first phase trade deal are much bigger than the extension for Huawei’s users. After failing to use the sidelines of the APEC summit in Chile as a negotiation table, both the U.S. and China have yet to find a new venue to ink the deal. Only reports of positive negotiation over phone calls were made, which caused concerns to investors.

 

KGI Securities stated that following a modest market rebound yesterday, the SET Index is poised to have some setback on Tuesday as news flow on trade talks turned slightly more uncertain. While there is basically no change in core themes on the trade talks in the past 24 hours, the latest report that Chinese officials remained pessimistic about the actual outcome of the 1st phase deal may spur Asian market volatility.

Also, the US announced last night it granted a 90-day extension, to February 16, 2020, for US companies to do business with Huawei. In KGI’s view, the announcement is positive on one side but also hints that the US and China may prepare for longer-than-currently expected discussions before the deal can be struck.

Overall, equities market consolidation is likely to continue. On the local side, 3Q19 GDP came out slightly below the consensus estimate, but should have limited impact on SET Index

 

Kasikorn Securities gives the first resistance is at 1610, which we believe will remain intact, and the second lies at 1620. Support is pegged at 1600/1595.