Kaohoon Morning Brief – 15 July 2022

1) FSS expects SET Index to move sideways down without positive drivers

Finansia Syrus Securities (FSS) expected the Thai stock market to move sideways to sideways down with a significant resistance at 1,530 points, saying that the overall outlook still lacks positive factors to drive the market.

The market is still concerned about the potential 100bps rate hike by the U.S. central bank at the meeting on July 26-27. Meanwhile, FSS expected the Thai central bank to hike interest rates by 0.25% in the meeting in August.

Thai baht recently hit THB36.60/dollar, coming close to 2009 low during the subprime meltdown. However, the baht is still in better shape than other currencies in Europe and Asia. The analyst expected it to appreciate in 4Q22-1Q23 following a recovery in tourism.


2) China’s economy grows at slower pace in 2Q22

The Chinese economy grew at a slower pace than expected in the second quarter of 2022, expanding 0.4% from a year ago and falling short of 1% growth from a Reuters poll. The Covid-19 outbreak in April and May that forced major cities like Beijing and Shanghai to go into lockdown had hurt the world’s second-largest economy to slowdown.

However, retail sales in June rose by 3.1%, beating expectations of flat growth.


3) US banking sector faces lower-than-expected earnings in 2Q22

The banking sector in the U.S. stock markets were facing lower-than-expected results in 2Q amid volatility in the market.

Morgan Stanley misses Q2 profit expectations on worse-than-expected performance from the investment banking segment. EPS was $1.39 vs $1.53 expected and revenue was $13.13 billion vs $13.48 billion estimated.

JPMorgan Chase EPS was $2.76 vs $2.91 estimated. Provision for credit losses were $1.10B, EST. $1.07B.


4) Fed’s governor opens for 100bps rate hike in July, but maintain 75bps for now

The Federal Reserve Governor Christopher Waller said that the market pricing in 100bps hike may be “getting ahead of themselves,” but added that he is willing to consider what would be the most aggressive interest rate hike by the central bank in decades at the meeting later this month.

The Fed needs to assess the data for the next couple weeks to decide if they will go above a 75bps hike in July, added the governor.