Major stock in Asia traded lower on Thursday, following a plummet in the U.S. stocks as the Federal Reserve signalled for a quantitative tightening.
On January 6, 2022, Thailand’s SET Index opened at 1,663.26 points, decreased 13.53 points or 0.81%.
As of 10:25 local time in Thailand, Nikkei fell 2.08%, SSEC slipped 0.35%, Hang Seng Index dipped 0.30%, ASX 200 decreased 1.74% and IDX Composite dropped 0.62%.
The Federal Reserve plans to start reducing the amount of bonds holding, according to the minutes from its December meeting released Wednesday. Even though the minutes did not specify the timeline for cutting the nearly $8.3 trillion in Treasuries and mortgage-backed securities the Fed is holding, the market expected the process to begin in the next few months in 2022. The market is now pricing in an 80% possibility of a rate hike in March.
Wall Street closed lower last night from tech selloff as the Fed expressed hawkish moves on aggressively cutting bonds buying in the next few months. Dow Jones closed 1.07% lower, S&P 500 dropped 1.94% and Nasdaq plunged 3.34%.
Mr. Koraphat Vorachet, Capital Nomura Securities’ strategist, through “Kaohoon Jor Talad Program” on January 6, 2022, expected the Thai stock market to move in negative territory with a support level at 1,667-1,658 points and a resistance level at 1,685 points after the Fed surprised the market with an anticipation of reducing balance sheet right after the rate hike, which is much faster than the market had expected and would result in a faster portfolio adjustment.
Mr. Vorachet stated that Capital Nomura Securities forecast four rate hikes for the Fed this year, while the consensus came with three hikes.
As for the investment strategy, Mr. Vorachet recommended Ngern Tid Lor Public Company Limited (SET: TIDLOR), seeing potential growth and more demand for loans from non-banks with new s-curve products, giving a target price at Bt44 per share. Meanwhile, the share price of BCPG Public Company Limited (SET: BCPG) underperformed its peers in the past month while Capital Nomura Securities still see potential profit growth with 10-15% in 4Q21 and continue to grow in 2022. More importantly, the investment plan worth 30,000 million baht that the company announced could be the key to unlock its value, giving a target price at Bt19.60 per share.
