Kaohoon Morning Brief – 5 September 2022

1) FSS expects Fed to likely raise 75bps rate despite weaker-than-expected job data

Finansia Syrus Securities (FSS) expected the SET Index to move sideways within 1,610-1,630 points. Although U.S. employment data slowed, as expected, the market still viewed that the Fed would likely raise its policy rate by another 0.75bps late this month. This week, investors should monitor Thailand’s inflation for August. It is due out today. The market expects headline inflation at +7.8% Y-Y and core inflation at +3.2%. If they are higher than expected, it would pressure the market and increase the prospect that the MPC will raise its policy rate by 0.25% late this month. Also, ECB will meet late this week. Although the market expects it to hike its benchmark rates, FSS viewed that the SET would move stronger than other regions due to Thailand’s economic uptrend. Domestic and value stocks with a historically lower PER should outperform. If the SET decreases to 1,580-1,600 points (+/-), it will provide an opportunity to accumulate more bets.


2) Chengdu extends Covid-19 lockdown for mass testing

The Chinese government announced a lockdown extension on the biggest city in Sichuan province, Chengdu, placing 21 million people under its restriction measures. The extension covers most of the city, which will follow with a mass testing from Monday to Wednesday. Public activities such as conferences and performances will continue being restricted.


3) G-7 nations agree to impose price cap on Russian oil

The Group of Seven (G-7) wealthiest nations agreed last Friday to impose a price cap on Russian oil, aiming to limit the Kremlin’s ability to fund its war operations in Ukraine, while keeping oil flowing to avoid a surge in prices.

However, Moscow vowed to cut oil deliveries to countries imposing such measures.

Energy analysts warned that this could backfire if key oil consumers such as China and India are not involved. Two of the largest Russian oil partners have been purchasing oil from Moscow at discounted prices ever since western countries sanctioned Russia over its attempt on invading Ukraine.

G-7 had been exploring plans to cap Russian oil prices since June.


4) German government approves €40 billion aid relief for rising energy bills

The German government approved a €40 billion consumer aid package to mitigate the energy price spike as supplies from Russia dwindled. The package includes a one-time payment of 300 euros to millions of pensioners to help them cover rising energy bills.

The government will also help students with a smaller one-time payment of 200 euros, as well as a heating cost payment for people receiving housing benefits.

This is already the 3rd relief package this year from the German government. The previous packages had a total volume of  around €30 billion