Kaohoon Morning Brief – 30 August 2022

1) FSS expects energy sector to boost market after 4% surge on OPEC+ potential production cut

Finansia Syrus Securities (FSS) expected the SET to move sideways within 1,630 points (+/-). Energy should support the market, in line with the crude price surge of 4% after OPEC+ could trim their production. Generally, other factors remain unchanged after the Fed chair’s more hawkish statement. On September 13, investors should monitor the CPI for August, a crucial factor before the Fed meeting in the following week. However, FSS maintained its view that the SET would outperform its peers in the West due to Thailand’s rising economic outlook. It breaks rank from other regions, which are slowing down and risk recession next year. Energy should outperform in the short run, and so should domestic and value stocks with undemanding PER. Growth and tech shares should see limited increases. FSS recommended its investors wait to accumulate more bets on weakness to 1,600 points (+/-). Also, FSS retained its bullish view of the SET outlook in 2H22-2023.


2) Oil prices jump 4% on potential production cut from OPEC+

Oil prices rose more than 4% on Monday on a potential OPEC+ production cut, while the conflict in Libya helped offset a strong greenback and shaky U.S. economic growth outlook.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies last week raised the possibility for a production cut.

The international benchmark Brent crude jumped $4.10 or 4.1% to settle at $105.09 a barrel, while the U.S. West Texas Intermediate (WTI) rose $3.95 or 4.2% to close at $ 97.01 per barrel.


3) Fed officer says the market now understands central bank’s commitment to taming inflation

Minneapolis Federal Reserve Bank President Neel Kashkari said on Monday that the selloff in stock markets after the Fed’s statement at Jackson Hole Symposium shows how much investors understand the U.S. central bank’s commitment about reducing inflation to its target of 2%.

The Minneapolis Fed noted that the central bank would keep policy rate restrictive for some time to ease inflation.


4) Expert says US needs miracle to dodge recession

Former Morgan Stanley Asia chairman Stephen Roach warned that the U.S. would need a miracle to avoid a recession as negative economic growth in 1H22 may foretell a much deeper downturn in the economy that could last into 2024.

The former chairman told CNBC that the U.S. will definitely have a recession as the lagged impacts of this major monetary tightening start to kick in.