Kaohoon Morning Brief – 25 July 2022

1) FSS expects SET Index to move sideways ahead of Fed’s meeting pointing to 75bps hike

Finansia Syrus Securities (FSS) expected the SET to move sideways within 1,545-1,565 points. Global risk assets registered limited gain while waiting for the Fed meeting on July 26-27 and corporate earnings results in Thailand and abroad. At the upcoming Fed meeting, investors now give a 77% probability that the Fed will hike its policy rate by 0.75%, down from 80% a month ago. Also, they now see only a 22% possibility that the Fed will raise its benchmark rate by 1.00%. Amid this upward interest rate cycle, FSS believed banks will extend their support to the market. Since their asset quality remains healthy, it should not be a concern. By contrast, upstream energy will see pressure from the rising interest rate. It would result in an economic slowdown. Other than that, the SET should see support from ICT today after TRUE-DTAC stated that the news that a sub-committee opposed their merger deal was untrue.

FSS maintained a mid-to-long-term bullish view of the SET, in line with the accelerating economy. In particular, tourism will enter its high season in 4Q22. It should support the Baht to rise. FSS still focused on investing in value plays with less demanding valuation than their pre-covid period. Also, stocks with a healthy 2Q22 profit outlook should outperform the market.


2) WHO declares monkeypox a global health emergency with Europe as epicenter

The World Health Organization (WHO) has declared monkeypox a global health emergency as Europe has become an epicenter of the outbreak where the community of men having an intercourse with other men is at a higher risk.

This designation by WHO is its first since the declaration of Covid-19 outbreak in January 2020, indicating that the monkeypox outbreak has a significant threat to become another major outbreak if not contained properly.

Still, the WHO chief stated that global risk is moderate, but the threat is high in Europe, while adding that monkeypox should not disrupt global trade and travel right now.


3) Singapore’s room rate hits 6-year high in June

Room rates in Singapore last month reached the highest in almost six years as the government eased coronavirus restrictions, paving the way for tourism to recover from the Covid-19 outbreak.

The average room rate in June was S$238.32, the highest since September 2016, representing an increase by 63% from a year earlier, according to data from the Singapore Tourism Board.

The country expects 4-6 millions international arrivals in 2022.