Market Roundup 4 October 2022

1) Thai stock market overview

Thailand’s SET Index closed at 1,578.00 points, increased 19.95 points or 1.28% with a trading value of 64 billion baht. The analyst stated that the Thai stock market bounded back in the same direction as regional markets over declining bond yields and dollars, resulting in returning flows into risk assets.

However, the analyst expected limited upside to the SET Index due to several uncertainties.


2) Bank of Thailand says economic recovery is likely intact

Thailand’s central bank’s chief said that economic recovery is likely intact and inflation should ease next year, expecting economic growth to expand 3.3% this year and 3.8% next year, according to the Bank of Thailand Governor Sethaput Suthiwartnarueput speaking at a business seminar on Wednesday.

The central bank forecast headline inflation of 6.3% for this year and 2.6% next year, while the target range for the Thai central bank is 1% to 3%.

To ease inflation and weak Thai baht, the central bank resolved last week to increase the kingdom’s interest rate by a quarter point to 1.00%.

As a key supporter for the economic recovery, Thailand expects to welcome 9.5 million foreign tourist arrivals this year and 21 million next year, though still a ways to go to reach 40 million tourists in pre-pandemic years.


3) Broker maintains “Overweight” rating on banking sector on earnings outlook in 3Q22

Krungsri Securities continues to maintain a “Overweight” rating on the banking sector, with SCB (TP THB155) and KTB (TP THB21) as top picks, due to expectations that aggregate earnings will rise both QoQ and YoY in 3Q22 thanks to a mix of loan book expansion and normalizing ECL.

The broker anticipates a 4% quarterly and 29% annual increase in banking sector earnings to THB43 billion in the third quarter of 2202. QoQ growth should be propelled by a mix of growing the loan book and bringing ECL back to normal. Meanwhile, a low base year-over-year increase in earnings is expected to drive strong growth (high provisions during lockdowns in mid-2021). The solid growth in loans during the quarter should help BBL achieve the highest earnings growth QoQ at 25%. With a smaller loan book and lower non-NII, KTB may report its strongest yoy earnings growth of 49% in 3Q22, but profits may fall 10% quarter over quarter.

The banking sector should benefit from more pronounced economic recovery in 2023 driven by stronger demand for loans, NIM recovery, and improving asset quality outlook.


4) Eurozone producer prices see 5% monthly surge in August

Producer prices in the Eurozone rose slightly more than expected in August, according to data released on Tuesday, fueled by rising energy costs, but price increases excluding the most volatile component slowed.

According to Eurostat, the EU’s statistical office, prices at factory gates in the 19 nations using the euro increased by 5.0% month-over-month and 43.3% year-over-year.

In a Reuters poll of economists, they predicted a monthly gain of 4.9% and an annual increase of 43.1%.