Market Roundup 9 September 2022

1) Thai stock market overview

Thailand’s SET Index closed at 1,654.62 points, increased 14.62 points or 0.89% with a trading value of 63 billion baht. The analyst stated that the Thai stock market performed well, boosted by DELTA, energy and banking stocks after investors relaxed on inflation concerns.

The analyst expected SET Index to move in sideways trends as investors will look forward to US CPI for August, giving a support level at 1,630 points and a resistance level at 1,666 points.


2) Deutsche Bank sees ECB hiking policy rates by 75bps in October

After the biggest rate hike by the European Central Bank (ECB) yesterday, Deutsche Bank said that it expected the central bank to deliver another big move in October.

“It is likely to be another close call in October and we have shifted our view to expect another 75bp hike (previously: 50bp),” Deutsche Bank wrote in its analysis.

The revision came after the German investment bank digested ECB’s chief Christine Lagarde statement saying that interest rates are far away from the appropriate levels for pulling inflation back down to target in a timely fashion.

The chief also noted that the market should anticipate hikes at the next several meetings.


3) CGS-CIMB rates Thai banks “overweight” on the back of rate hikes

CGS-CIMB Securities believes that Thai banks, especially the larger ones like BBL and SCB, will gain from anticipated rate hikes.

Larger banks have more floating loans from corporations, SMEs, and mortgages, while mid-to-small banks have more hire-purchase loans with fixed interest rates.

The research group has therefore reaffirmed its “overweight” recommendation for the sector, expecting ROE to increase from 6%-7% (in 2020-21) to over 8%-8% (in 2022-24).


4) Expert says freight rates tend to slow down further into 2023

S&P Global Market Intelligence stated that a much reduced port congestion level, along with weaker cargo arrivals, was one of the major reasons behind the significant decrease in freight rates.

The research group wrote that based on expectation of weaker trade volume, they do not expect extremely high congestion again in the coming quarters as dry bulk freight rates had peaked in the second quarter, a quarter early to its typical seasonality performance.

S&P Global’s Freight Rate Forecast models predicted BDI to continue falling by 20% to 30% this year before recovering slightly in 2024.