Kaohoon Morning Brief – 26 July 2022

1) FSS expects limited movement in SET Index prior to the long holidays and Fed’s meeting

Finansia Syrus Securities (FSS) expected the SET to move sideways within 1,550-1,570 points. The rally should be more limited since the market is about to go on long holidays before the Fed meets on July 26-27. At the meeting, the market anticipates the FOMC to hike its policy rate by 0.75% with a 77% probability. Also, the real sector will report more earnings next month. In this regard, domestic plays would perform well due to the rising economic outlook, particularly in 2H22. Besides, the BoT stated that it would gradually hike its benchmark rate. It would be a blessing for banks, finance, and property, which tumbled sharply earlier. Also, the Thai central bank viewed that the Baht would appreciate in 4Q22 after tourism enters its high season. It would support mid-to-long-term fund inflows.

FSS still focused on investing in value plays with less demanding valuation than their pre-covid period. Moreover, stocks with a healthy 2Q22 profit outlook would outperform the market.


2) Gas prices jump 10% after Russia reduces gas deliveries to Germany to only 20% of max cap

Russia’s state-owned gas company Gazprom stated on Monday that it would slash half the flow of gas deliveries to Germany through its North Sea pipeline to just 20% of capacity. The move by the Russian government came just as the European Union is expected to hold an emergency meeting on Tuesday to discuss a cut of natural gas consumption by 15%. European gas futures extended gains on Monday by more than 10% after the report of slashing gas deliveries came out.


3) Bitcoin drops to $21,000 level on report of Coinbase being probed by SEC

Bitcoin dropped to $21,000 level once again after the report of Coinbase will be facing a U.S. SEC probe into whether the crypto exchange platform had improperly let Americans trade digital assets that should have been registered as securities.

However, the report was not confirmed by SEC or Coinbase up to this point.

But according to a publication in the United States Department of Justice website, three were charged in the first ever cryptocurrency insider trading tipping scheme.


4) Probability shows 100% 75bps rate hikes this week

Prior to the Federal Reserve meeting this week for policy rate hike, the Chicago Fed’s watch tool gives a 100% probability of a 75bps hike on the meeting in July. Meanwhile, the probability of a quarter rate hike at the next FOMC meeting on September 21 is 47%, but 100% for the probability of a 50bps hike.