Market Roundup 29 August 2022

1) Thai stock market overview

Thailand’s SET Index closed at 1,626.52 points, decreased 18.26 points or 1.11% with a trading value of 71 billion baht. The analyst stated that the Thai stock market traded lower in the same direction as global markets in response to the Fed’s hawkish message to tackle inflation, which pressured the stock market as a result. Nevertheless, refinery and coal stocks helped cushion SET Index and limited the impact from Fed’s rate hike fears. The analyst expected SET Index to rebound tomorrow, giving a support level at 1,615-1,605 points and a resistance level at 1,640-1,650 points.


2) European gas falls as Germany’s stockpile fills faster than expected

Natural gas prices in Europe fell the most since March after Germany reported that its gas storages are filling up faster than expected ahead of winter.

According to German Economy Minister Robert Habeck, the government’s goals for filling gas storage facilities were met ahead of schedule, calming fears of severe gas shortages this winter.

Habeck estimates that the government target of 85% storage capacity by October might be met as early as the first week of September.

Benchmark Dutch front-month futures fell as much as 19%, partially offsetting last week’s increase of about 40%. In Germany, electricity rates have also fallen from their all-time high.


3) Food Prices fuel Malaysia inflation to 4.4% in July

Malaysia’s annual inflation rate rose to a 14-month high of 4.4% in July 2022, a whopping 100bps increase from the previous month of 3.4%. The increase in July was in line with market consensus of 4.4% due to a surge in food prices to a new record peak of 6.9% after rising 6.1% in June.

Meanwhile, producer prices rose to 7.6% year-on-year in July 2022, slowing down from a 10.9% gain in June. Lastly, prices of manufacturing slowed down to 9.9% growth, compared to 10.0% in June.


4) Thailand’s industrial sector faces new challenges after minimum wage hike

Analysts see new challenges for Thailand’s manufacturing sector as the country prepares to raise its daily minimum wage for the first time in more than two years in response to mounting inflationary pressures.

With this increase, Thailand’s monthly minimum salary jumps from 9,840 to 10,620 baht, making it one of the highest in Southeast Asia.

According to the Kasikorn Research Centre, a 5% increase in the minimum wage would have an impact on costs in 4Q22 and the following year, with an average cost increase of about 0.5% and a potential drag on operating profit of about 4.6% across the agriculture, retail, hotel, and restaurant, and construction sectors, respectively.

Despite businesses facing increased costs in a wide range of areas, there is room for limited price hikes across the board.