Kaohoon Morning Brief – 2 August 2022

1) FSS says concerns turning to China-US tension over Taiwan

Finansia Syrus Securities (FSS) expects the SET to move sideways within 1,585-1,600 points after yesterday’s surge. International markets take a breather after investor concerns turn to the economic slowdown in the U.S. and China, which pressures oil demand. Also, Libya ramped up its output to 1.2mn barrels/day from 800,000 barrels/day, which pressures crude prices.

The securities company still believes that oil prices have hit this year’s peak in June, and global inflation should slow from September onwards. Hence, the Fed might not need to accelerate its rate hikes. However, interest rates remain on their upward path. Stocks at a disadvantage during oil price hikes, such as power and industrials, should perform better.

The SET’s short-run upside remains capped at 1,600 points due to the global economic slowdown and the slow recovery in Thailand. However, domestic plays should perform well, particularly in 2H22. It should support mid-to-long-term fund inflows.

FSS still focuses on investing in value plays with less demanding valuations than their pre-covid level. Also, stocks with a healthy 2Q22 profit outlook should outperform the SET.


2) Coal price is expected to run high into 2023

Shaw and Partners’ analyst stated that global coal consumption is expected to return to record levels reached almost 10 years ago amid energy supply crunch, resulting in consumers to alternate to coal instead.

In his interview with CNBC, Shaw and Partners senior analyst Peter O’Connor said that due to tight supply and ongoing Covid-19 pandemic, he expected coal price to remain high for longer, probably well into 2023 calendar year.


3) California declares state of emergency over rising monkeypox cases

California declared a state of emergency over the rapidly spreading monkeypox outbreak, marking it as the third U.S. state to raise a red flag against within a few days after the announcement in New York and Illinois.

According to the U.S. government report, total confirmed monkeypox/orthopoxvirus cases in the United States of America are 5,811 as of August 1, 2022.

Montana and Wyoming are the only two states that have yet to report a contraction.