Kaohoon Morning Brief – 9 August 2022

1) FSS advises to speculate stocks with a robust 2Q22 earnings forecast

Finansia Syrus Securities (FSS) stated that it expected the SET to move sideways-to-sideways up within 1,600-1,615 points, while the movement of each stock will depend on its 2Q22 earnings results, whether it beats or misses estimates. The market’s focus is on tomorrow when the MPC meets. The consensus expected the first rate hike at 0.25%. Also, they will keep a close eye on U.S. inflation for July, which should be passing its peak. Strategically, FSS noted that it still focused on stocks with a robust 2Q22 profit forecast and a consistently healthy outlook in 2H22. Also, FSS liked value and domestic plays that benefited from the domestic economic recovery. However, the SET’s rally to above 1,600+ narrows its upside compared to the target of 1,670 points.

Hence, FSS recommended short- term profit-taking into strength after placing more bets at 1,520 points (+/-) to repurchase them on weakness.


2) Goldman revises down Brent price to $110

Goldman Sachs revised down its Brent price forecast for the third quarter of 2022 to $110 a barrel after the price has been plunging in recent weeks.

The revision in 3Q22 was down from a previous projection of $140 per barrel as the investment banking cited low trading liquidity and a mounting wall of worries, including fear of recession.

However, Goldman still believes the case for higher oil prices remains strong.


3) Food prices have dropped significantly in July, FAO says

Food prices have dropped significantly in July from the previous month, according to the United Nations’ Food and Agriculture Organization’s food price index.

The index, which tracks monthly changes in the global prices of a basket of food commodities, fell 8.6% in July from the previous month. In June, the index fell just 2.3% on a monthly basis.

Still, the index in July was 13.1% higher than July 2021.


4) Morgan Stanley says bear market is not over even after inflation starting to fall

Morgan Stanley stated that it is too soon to say that the bear market is over after seeing a drop in inflation, warning that companies will soon start to grapple with falling prices and higher wage costs, which would potentially weigh on profits.

“The rally in stocks has been powerful, and has many investors believing the bear market is over. However, we think it’s premature to sound the all-clear simply because inflation has peaked,” Morgan Stanley said.