Kaohoon Morning Brief – 19 September 2022

1) FSS eyes Fed’s meeting on Sep 21 for 75bps hike to pressure risk asset recovery

Finansia Syrus Securities (FSS) stated that it expected the SET to move sideways within 1,620-1,640 points due to the lack of fresh catalysts. Although several notable central banks, including the BoJ and BoE, will meet this week, the spotlight is still on the Fed meeting on September 21. The market expects it to hike its policy rate by another 0.75% to bring down the sharply higher-than-expected inflation. At the same time, the Dollar Index and U.S. bond yields remain high. They pressure risk assets’ recovery to limit. Also, they influence international funds to flow out of Thailand in the short run after their YTD net inflows of over Bt160bn. However, Thailand’s upward economic outlook should help the SET outperform its global peers. Also, domestic and reopening plays, particularly laggards with undemanding valuations, would perform better than the market. For mid-to-long-run investments, FSS maintained that 1,600-1,610 (+/-) is the entry point.


2) Goldman Sachs cuts US economic growth forecast for 2023 to 1.1%

Goldman Sachs cut US economic growth forecast for 2023 to 1.1% from its previous estimate of 1.5% after recently boosting its prediction on the Federal Reserve interest rate hikes.

The firm raised its Fed funds rate forecast by 75 basis points over the last two weeks for a terminal rate estimation of 4% to 4.25% by the end of this year.

Meanwhile, Goldman Sachs maintained the 2022 projection at 0%.


3) Chengdu exits city-wide lockdown

The city of Chengdu, the megacity of Sichuan province, China, will return to normal life from Monday after the authority lifted a city-wide lockdown imposed on September 1, 2022, to combat Covid-19 outbreak.

Still, local residents will be required to take Covid-19 test every week and present negative results within 72 hours to enter public venues and take public transportation.


4) US will defend Taiwan in case of invasion by mainland China

The U.S. President Joe Biden said in an interview with CBS on Sunday that Washington’s forces would defend Taiwan in the event of an invasion by mainland China.

Back in November last year, the White House published a statement, saying that “On Taiwan, President Biden underscored that the United States remains committed to the ‘one China’ policy, guided by the Taiwan Relations Act, the three Joint Communiques, and the Six Assurances, and that the United States strongly opposes unilateral efforts to change the status quo or undermine peace and stability across the Taiwan Strait.