Kaohoon Morning Brief – 29 September 2022

1) FSS remains positive on domestic and reopening plays, expecting to outperform the market

Finansia Syrus Securities (FSS) expected the SET Index to recover in the short run after plummeting to test its support of 1,600 points (+/-) due to the bullish sentiment from international markets. They recovered well overnight after BoE pledged unlimited bond buying to reduce its currency volatility. The operation helped soothe bond yields. In particular, the U.S. 10-year bond yield decreased to 3.74% after surging to 4% earlier. Also, the Dollar Index weakened. They supported funds to turn into risk assets. However, FSS did not expect widespread and long-lasting recoveries. In this regard, investors should keep monitoring upcoming crucial global economic indicators to see if they slow more than expected or not. In Thailand, the domestic factors remain healthy. In particular, local consumption and tourism recovered. It helped the MPC to increase its policy rate by 0.25%, as expected. Also, banks started to raise their rates in tandem with the policy rate.

FSS still viewed that domestic and reopening plays would outperform the market. FSS recommended its investors hold their bets after accumulating more at 1,600 points (+/-). FSS saw the index’s crucial support at 1,580 (+/-) for this round.


2) Two of Hong Kong’s biggest IPO trade lower on first trading day

Two of Hong Kong’s largest initial public offerings edged lower on their first trading day on Thursday despite Hang Seng Index moving in a positive territory in the morning session.

Share prices of Zhejiang Leapmotor Technology dropped 21% from its IPO of 48 Hong Kong dollar per share while Onewo Inc fell 5.37% from the offering price of 49.35 HKD.

The decline came after both securities fell in grey market trading on Wednesday, offered by Hong Kong brokerage Phillips Securities Group.

The deals are the largest completed IPOs in Hong Kong in 2022.


3) BoE steps in to calm bond market rout

The Bank of England will step in to prevent bond selloff as the central bank said that it would buy as many long-dated government bonds as needed to stabilize financial markets after a chaos broke out on the recent proposal of the new government’s so-called mini-budget that includes a not-so-mini tax cuts.

The central bank said that the program of buying long-dated government bonds will start from today to October 14, and it would delay the start of a programme to sell down its 838 billion pounds ($891 billion) of government bond holdings, but affirmed that it will surely reduce 80 billion pound over the next 12 months.