Kaohoon Morning Brief – 28 September 2022

1) FSS says domestic factors remain upbeat for Thailand with less pressure than oversea markets

Finansia Syrus Securities (FSS) expected the SET to move sideways to build its base at its crucial support of 1,600-1,610 points. Today, investors should keep a close eye on the MPC meeting. The market thinks the committee would likely hike its policy rate by 0.25%, in line with the economic recovery, which should reduce pressure on the weak Baht. However, the global sentiment remains lackluster. It still has pressure from the rate uptrend, the high U.S. bond yields and Dollar Index, and the Fed officials’ comments supporting policy tightening to bring down inflation. Also, the energy situation in Europe would taint the market after a reported leakage at Nord Stream 1-2 could drive up energy prices again. However, domestic factors remain upbeat, and the pressure is less than in international markets. Thus, FSS stated that it thinks domestic and reopening plays would outperform the market. If the SET decreases to its crucial support, it will provide an opportunity to accumulate mid-to-long-term bets.


2) China’s yuan hits 14-year low amid rising dollar and bond yields

China’s yuan hits 14-year low against dollars, despite new central bank steps to defend the currency from strong greenback and US bond yields that threatened to continue to rise on the back of further rate hike by the fully-committed Federal Reserve on taming inflation.

The spot rate of yuan against dollar is 7.223, the highest since 2008.

The Korean won led emerging markets with a loss today at -1.04%, while Thai baht dipped 0.28% against the greenback.


3) German believes Nord Stream pipelines were sabotaged

German officials stated that they believed the incident that caused damage to three lines of the Nord Stream gas pipeline systems in Baltic Sea in one day was the result of sabotage.

The Nord Stream 2 was not operational at the time the war broke out between Russia and Ukraine, while Moscow completely shut down Nord Stream 1 in early September.

It has been reported that Germany’s gas storage has more than 90% of its capacity, but some economists doubt whether it would be enough to get through this winter.

Benchmark European gas prices rise as much as 12% on Tuesday.


4) IMF critizes UK’s deep tax cuts plan

The International Monetary Fund criticized the new British Prime Minister Liz Truss’ plan to pull the UK out of years of stagnant growth with deep tax cuts and deregulation, the move which sent sterling to hit an all-time low of $1.0327 on Monday.

IMF said that the plan would likely increase inequality and it questioned the wisdom of such policies.