Market Roundup 27 September 2022

1) Thai stock market overview

Thailand’s SET Index closed at 1,610.58 points, decreased 10.67 points or 0.66% with a trading value of 75 billion baht. The analyst stated that the selloff in insurance and banking stocks ahead of the policy meeting by the Bank of Thailand tomorrow pressured the market, while the depreciation in Thai baht caused funds outflow. The analyst expected the SET Index tomorrow to bounce back if Wall Street recovers after a series of declines.


2) World Bank revises Thai GDP upward, but trims East Asia growth

The World Bank revised upward its growth forecast for Thailand to 3.1% this year, citing the positive effects of private consumption and exports as tourism tends to recover.

In June, the bank projected a 2.9% rise in the Thai GDP.

The bank, however, lowered its growth projection for Thailand’s economy from 4.3% for 2023 to 4.1%.

Meanwhile, the World Bank said in a report that growth in East Asia and the Pacific, which includes China, would drop to 3.2% in 2022, down from its 5.0% forecast in April, and the previous year’s growth of 7.2%

However, the pace of expansion will pick up next year, the World Bank said on Tuesday.

China is expected to grow at a 2.8% annual rate this year, a significant decrease from the bank’s earlier prediction of 5.0%. Chinese economic growth in 2021 was 8.1%, the highest rate in a decade. Meanwhile, in 2023, the world’s second-largest economy is likely to expand by 4.5%.

Another risk to the region’s prospects is the aggressive interest rate hikes that central banks around the world are doing to tackle growing inflation. According to the World Bank, they have resulted in currency devaluations and outflows of capital.


3) Shell sees global jet fuel demand to return to pre-pandemic levels by 2024

Energy giant Shell expects worldwide aviation fuel demand to recover to pre-pandemic levels of 300 million tonnes annually over the next one to two years.

President of Shell Aviation Jan Toschka told Reuters on Tuesday that demand in the United States has returned to 2019 levels, while consumption in Europe has rebounded to over 80% and is on track for full recovery in the next year.

However, with the European Union’s restrictions on Russian oil products, Europe’s jet fuel supplies are tightening, forcing the region to purchase more gasoline from the United States, China, India, and the Middle East.


4) Expert sees opportunity to accumulate if BOT moves in line with market on raising rates

Thailand’s central bank will hold its MPC meeting on Wednesday (September 28), with analysts expecting a 0.5% increase in interest rates — particularly since the THB fell below 37.6 per US$.

According to Asia Plus Securities, Thailand’s economy is rebounding since the country reopened to tourists and the emergency decree was lifted, resulting in lower risk. However, investors should keep an eye on the MPC meeting this Wednesday on whether the interest rate will be raised by 0.5% (rather than the 0.25% previously projected); a hike larger than 0.25% will have a negative impact on the SET Index.

If the interest rate is hiked by 0.25%, negative sentiment will subside and this should be a good accumulation point. A 0.25% hike is projected at the next meeting.