Kaohoon Morning Brief – 11 July 2022


1) FSS recommends focusing on necessity-related value plays and reopening stocks

Finansia Syrus Securities (FSS) expected the SET to move sideways within 1,550-1,570 points. The above-estimate U.S. employment showed the short-term economy remained healthy. However, it also made the market believe the stubbornly higher-than-expected inflation would persist and make it easier for the Fed to raise its policy rates at the meeting in July and September. This week, investors should keep a close eye on the U.S. inflation for June. If it is higher than expected, it will continue pressuring the index. In Thailand, the spotlight will be on banks’ 2Q22 earnings season. FSS anticipated highly volatile movements in 3Q22 and a limited upside due to the extended inverted yield curve. It reflected a recession risk for 2023 in the U.S. and Europe. However, the Fed should outperform its peers in other regions due to its accelerating economy, in line with the reopening. FSS saw crucial support at 1,500-1,520 (+/-). If the index decreases to the said level, it will present an opportunity for accumulation. In this regard, FSS stated that it still focused on investing in necessity-related value plays and reopening stocks.


2) Musk to terminate Twitter’s deal for failing to provide requested information

Tesla CEO Elon Musk said that he wants to terminate his $44 billion deal to buy Twitter, according to a letter sent by his lawyer, saying that Twitter did not comply with Musk’s request for relevant business information. Musk once said that he wanted to assess Twitter’s claims that about 5% of its monetizable daily active users are spam accounts.

In the meantime, Twitter had hired a US law firm to sue Musk for terminating the deal.

“The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery,” Twitter’s board chair Bret Taylor said.


3) Macau to enter a city-wide lockdown amid Covid outbreak

Macau will enter a city-wide lockdown for a week starting July 11 as the authorities try to control the spread of Covid-19 outbreak.

City officials urged the public not to panic-buy food as essential businesses such as supermarkets, pharmaceuticals and takeaway restaurants will remain open. However, all casinos will be shut down.


4) U.S. inflation in June is expected to remain at 40-year high

The U.S. inflation report for June will be released Wednesday at 7:30PM BKK time. The consensus estimate is at another 40-year high, with inflation for the month at 1.1% and for the year rising to 8.8%. Core inflation, however, is expected to slip to 5.8% year over year.