Kaohoon Morning Brief – 14 September 2022

1) FSS expects SET Index to suffer lesser loss due to lower inflationary pressure as economy accelerates

Finansia Syrus Securities (FSS) stated that it expected the SET Index to decrease to its support at 1,625-1,630 points (+/-) due to the risk-asset sell-off after U.S. inflation for August beat estimates and did not show signs of weakness to the Fed’s target of 2%. As a result, the Dollar Index quickly increased. Also, the market feared that the Fed would aggressively hike its policy rate. At this point, the consensus has given a 33% probability that the Fed will increase its benchmark rate by 1% next week. Also, they anticipated a higher rate hike at the meeting in November.

Although U.S. equity markets tumbled by 4-5%, FSS maintained that the SET would suffer a lesser loss due to lower inflationary pressure. Also, the economy will likely accelerate, breaking rank from the global economic slowdown. Domestic and defensive plays should outperform at this time. For mid-to-long-term investments, the accumulating points remain at 1,600- 1,610 (+/-).


2) Market priced in 75bp rate hike in Sep with 21% probability for full percentage point hike

The Labor Department announced Tuesday that the U.S. inflation data in August rose 8.3% year-on-year and 0.1% since last month. The figure came down from its peak of 9.1% in June and a 8.5% reading in July. Still, the data missed expectations from economists and analysts for a 8.1% rise in August.

Core inflation which excludes volatile oil and food prices rose 6.3% YoY from 5.9% in July and 6.1% expected. The figure rose 0.6% from the previous month, compared to 0.3% expected.

Prior to the announcement of inflation data, the market expected inflation to pass its peak while lowering the possibility of a 75bps rate hike from the Federal Reserve later this month. However, after an unexpected inflation data that missed economists’ forecast, the market is now 100% priced in for a 75bps hike, while the economic indicator pointed to a 21% probability of a full percentage point rise.


3) Twitter’s shareholders approve $44 billion deal by Elon Musk

Twitter’s shareholders voted on Tuesday to approve Tesla CEO Elon Musk’s $44 billion buyout of the company as the deal is now in a court battle in which Musk is trying to scrap the deal.

Musk announced backing off from the deal, claiming that Twitter failed to provide him enough information on the number of spam and fake accounts on the site as he looks to terminate those accounts.

Meanwhile, Twitter said that Musk must fulfill his commitment to the deal he announced.