Kaohoon Morning Brief – 5 August 2022

1) FSS recommends buying healthy 2Q and 2H profit forecast stocks

Finansia Syrus Securities (FSS) expected the SET to move sideways at about 1,600 points (+/-). Today, investors should keep a close eye on Thai inflation for July. The market expects the headline to be flat M-M and increase by 8 Y-Y and core CPI at +2.6% Y-Y. FSS believed that inflation acceleration peaked in June – July after crude prices tumbled. According to the latest data, WTI slipped below US$90 a barrel for the first time since the Russia – Ukraine war. If inflation misses estimates, it would help the sentiment and influence the BoT to ease its further rate hikes. In the U.S., non-farm payrolls for July are due tonight. The market expects it to decrease to 250,000.

In the short run, anti-commodity should get a boost from easing cost pressure, in line with energy prices. Financials should continue to outperform due to their undemanding valuation. FSS recommended investors speculate on stocks with a healthy 2Q22 profit forecast and a potentially robust profit performance in 2H22. In the mid-to-long term, FSS still preferred value and domestic plays. They benefit from domestic economic recovery. However, if the SET rallies above 1,600+ points, FSS suggested short-term profit-taking after accumulating at 1,520 points (+/-) before buying back on weakness.


2) China fires missiles into Taiwan Strait as part of military drills

The Chinese military fired ballistic missiles that went up into Taiwan’s airspace and into the waters around the island as part of its military drills on Thursday.

Taiwan’s defence ministry said it detected 22 Chinese fighter jets briefly crossing the Taiwan Strait yesterday, while Taiwan was also preparing its fighter jets for responding.

China said that the exercise was done in Chinese waters and the missiles that they fired also hit Chinese waters, indicating that Taiwan as its surroundings are parts of China.


3) Thailand’s inflation rose 7.61% YoY vs 8.3% expected

Thailand’s inflation rate in July rose 7.61% YoY, largely lower than an 8.3% expansion forecast by economists.

Core Consumer Price Index (Coe CPI) accelerated to 2.99%, according to the announcement from the Ministry of Commerce on Friday. Core inflation that excludes food and energy prices in July was slightly higher than an estimate of 2.7% increase by economists.

The Ministry of Commerce revised the inflation forecast for 2022 up to 5.5-6.5% from 4-5%.


4) US jobs expected to increase 250,000 in July vs 372,000 added in June

U.S. employment report to be released on Friday, which is expected to show nonfarm payrolls increased by 250,000 jobs last month, after rising by 372,000 jobs in June.

If the U.S. labour market proves to be strong, it could feed into potential aggressive steps by the Fed to curb inflation.