Kaohoon Morning Brief – 1 September 2022

1) FSS expects SET Index to test support level of 1,625-1,630 as global sentiment pressured by recession concerns

Finansia Syrus Securities (FSS) expected the SET to move sideways-down to test its support at 1,625-1,630 points. The global sentiment still sees pressure from recession concerns in the West and the Fed’s rate hike. As a result, funds extended their outflows from risk assets. Crude prices dropped by another 2%, extending pressure on the energy sector in the short run. Also, the U.S. private employment for August decreased to 130,000 from 270,000 a month ago. On Friday night, investors should monitor U.S. non-farm payrolls, which the market expects a slowdown. The eurozone inflation of 9.1% Y-Y for August continued to hit a new high. In this regard, the U.S. will report its CPI on September 13. If it beats estimates, it will put continued pressure on risk assets.

However, FSS believed the SET would not retreat as much, supported by the economic uptrend and fund inflows. The securities company expected domestic and value plays with historically lower PER to outperform. If the index decreases to 1,580-1,600 (+/-), it would provide an opportunity to accumulate.


2) US stockpiles drop sharply by 3.3 million barrels, 6% lower than 5-year average

Crude-oil stockpiles fell by 3.3 million barrels to 418.3 million barrels for the week ended August 26, according to the data from the U.S. Energy Information Administration (EIA). Analysts surveyed by The Wall Street Journal estimated crude stockpiles to fall 1.2 million barrels.

Oil stored at Cushing, Oklahoma, decreased by 523,000 barrels to 25.3 million barrels in the same period.

Meanwhile, gasoline stockpiles dropped 1.2 million barrels to 214.5 million barrels vs. a 1.1 million barrels draw expected.


3) US government tells Nvidia to stop selling chips to China and Russia

The share price of Nvidia fell 6.5% after trading hours on Wednesday after the company said that it had been told by the U.S. government to stop selling chips in China and Russia.

According to the filing to SEC, Nvidia stated that a new license is required for future exports to China, including Hong Kong, in order to reduce the risk that the products could be used by the Chinese military.

Nvidia said that it expected to lose $400 million in potential sales in China in the third quarter of 2022.


4) Chinese manufacturing activity contracts in August, lower-than-expected

Chinese manufacturing activity dropped in August as Covid-19 lockdown and shortage in energy supply weighed on industrial activity, according to a private survey on Thursday.

The Caixin manufacturing purchasing managers index (PMI) for August was 49.5, compared with July’s reading of 50.4. Analysts expected a reading of 50.2 for August.