Kaohoon Morning Brief – 18 August 2022

1) FSS expects negative session due to bearish sentiment from international markets

Finansia Syrus Securities (FSS) expected the SET’s rally to decrease due to the bearish sentiment from international equity markets. However, it should remain stronger due to continued fund inflows. In particular, FSS expected it to move within 1,630-1,650 points.

The U.S. retail sales for July were flat M-M. It missed estimates and was down from +0.8% M-M last month. It triggered market concerns over the future economic outlook. The minutes of the Fed meeting were generally in line. It reiterated the target to drive inflation down to 2%. However, the surge may slow should the economy risk a slowdown.

FSS stated that it thought that the SET will outperform its peers in other regions due to listed companies and Thailand’s GDP, which are on an upward path. Strategically, FSS still liked domestic and reopening plays. FSS prefered mid-to- big-sized laggards due to their higher short-term upsides after the SET’s swift rallies of about 8% in the past month. They may retreat, especially when foreign investors start to slow their purchases and close their sizable net long positions on the Index Futures


2) US retail sales flat in July as gas prices and auto sales drop

US retail sales were unexpectedly flat in July amid a sharp drop of gasoline prices weighed on receipts at gas stations and consumers turned more heavily to online shopping, according to the Census Bureau reported Wednesday.

With less burden on gas prices, consumers were spending their freed up money on other goods, such as furniture, electronics and appliances, as well as building materials and garden equipment.

Retail sales in July were flat, compared to 0.1% expected by economists. Almost everything is edging higher apart from autos, gasoline, and general merchandise stores.


3) Fed will not slow down rate hike until inflation comes down substantially

Federal Reserve officials at their July meeting signalled that the central bank would not consider taking a foot off the gas pedal on interest rate hikes until inflation comes down substantially, stated minutes from the session released Wednesday.

The Fed had hiked interest rates by 75 basis points in its previous meeting amid consumer prices at 40-year high. The target inflation rate is 2%.