Kaohoon Morning Brief – 29 August 2022

1) FSSIA expects limited downside to SET Index due to rising economic outlook in Thailand

Finansia Syrus Securities (FSS) expected the SET to retreat to 1,610-1,630 points, in line with the global bearish sentiment. Funds flowed heavily out from risk assets after the Fed chair’s more hawkish remark at the Jackson Hole Symposium made markets believe the Fed would raise its policy rate higher and longer than expected. As a result, the Dollar Index and U.S. bond yields increased. However, FSSIA still viewed that the SET Index would fall less than its peers in the West due to the rising economic outlook in Thailand. It breaks rank from other regions, which are in retreat and risk recession next year.

In the short run, high-PER growth & tech stocks and finance would see pressure, while domestic plays should outperform the mid-to-long run. FSSIA recommended its investors wait to accumulate more bets on weakness and maintain its bullish view of the SET in 2H22-2023.


2) US 2-year Treasury yield hits higher level since 2007 after Fed’s hawkish messages

The U.S. 2-year Treasury yield rose 6bps to 3.46%, hitting the highest level since 2007 after Fed’s Chair Jerome Powell and a number of his peers delivered hawkish messages at the Jackson Hole Symposium last Friday.

The chairman stated that the U.S. central bank will use its tools forcefully to bring down inflation that is running near its 40-year high.


3) Odds for 75bps rate hike jump to 66% after Fed’s symposium

The US central bank’s September rate-hike odds shifted hawkishly from pre-JAckson Hole Symposium levels to around a 66% chance of 75bps. The probability of a 50bps rate hike fell to 33%. Before the Fed’s key message last Friday, the odds were close at around 50-50.


4) Bankruptcy Court denies 3M attempt to move legal liabilities

The share price of 3M fell 9.5% to close at $129.14 on Friday, its sharpest one-day drop since April 2019 after a legal ruling went against the company to deny 3M ’s attempt to move legal liabilities, Aearo Technologies, associated with faulty earplugs sold to the military by a 3M the company’s subsidiary into bankruptcy court.