Kaohoon Morning Brief – 23 September 2022

1) FSS expects SET Index to continue outperforming regional peers, benefiting from rising economic outlook

Finansia Syrus Securities (FSS) expected the SET to move sideways and outperform its regional peers. The market still lacks fresh catalysts and responds to the Fed meeting results. In particular, the U.S. tightening would likely be quick and last longer. As a result, U.S. bond yields and the Dollar Index extended their gains, pressuring fund outflows from risk assets.

However, FSS still thought that the Thai equity market would benefit from the rising economic outlook in 2H22-2023, in line with the reopening and the removal of COVID-19 from a dangerous infectious disease. It should help support mid-to-long-term fund inflows into the Thai equity market and reduce pressure on the weak Baht. Domestic and reopening plays should outperform the market. Also, the MPC’s potential rate hikes at the last two meetings this year should support banks to perform well at this time. If the SET decreases to 1,600-1,610 points (+/-), it will provide an opportunity for additional accumulation.


2) BoE decides to raise rate by 50bps to avoid recession

The Bank of England approved to raise its benchmark interest rate by 50 basis points on Thursday.

The base rate was raised to 2.25% from 1.75% after inflation in the United Kingdom slightly dipped to 9.9% in August, but remained well above the central bank’s target of 2%. Despite being pressured by rising energy and food prices, core inflation, which excludes the aforementioned categories, was still 6.3% on an annual basis in August.

The move by BoE came after its economy was widely expected to enter a recession as economists forecast a 0.1% contraction in the third quarter, followed its 0.1% contraction in the second quarter.


3) Turkey’s central bank cuts rate by another 100bps

Turkey’s central bank once again cut its interest rate on Thursday despite soaring inflation of over 80% in the country.

The Turkish monetary policy committee lowered the interest rate by  another 100 basis points, following its surprised move in August that also cut rates by a full-percentage point. The cut in September will bring the key one-week repurchase rate from 13% to 12%.

Turkey announced that its inflation in August was 80.2%, showing an acceleration for the 15th consecutive month and the highest level in 24 years.