Kaohoon Morning Brief – 12 October 2022

1) FSS recommends investors monitor flooding situation and banks’ earnings season

Finansia Syrus Securities (FSS) expected the SET to move sideways to test its crucial support at 1,556-1,560 points amid a weak trading volume due to the upcoming holidays. Also, the U.S. PPI and CPI for September are almost due. If they beat estimates, it will pressure the Fed to press on with its aggressive rate hikes. According to the latest data, U.S. 10-year bond yields surged to almost touch 4% again. Also, the global economy sees higher risks after the IMF cuts its world GDP forecast for 2023 to +2.7% and gives a 25% probability for below 2% growth.

On the local front, Thailand still lacks fresh catalysts. Investors should keep a close eye on the flooding situation. If it escalates and getting close to Bangkok, it will provide a risk. Today, banks’ 3Q22 earnings season starts. More will be due, and analysts will begin their earnings preview for the real sector next week. Although they are generally unexciting since the rainy season is a low season, we maintain our bullish view of domestic and reopening plays in 4Q22 when tourism and spending resume their high season. Also, they should accelerate in 2023.


2) JPMorgan expects 5% decline in stocks if U.S. inflation comes in above 8.3%

JPMorgan said that anything above 8.3% for the U.S. inflation in September would put stocks at a risk of 5% decline.

Between an expected inflation of 8.1% – 8.3%, JPM saw a potential “buyer’s strike” where S&P 500 slides 1.5% to 2%. Meanwhile, JPMorgan expected inflation below 7.9% to lift equity gauge by at least 2%.


3) S.Korea central bank raises interest rate by 50bps

South Korea’s central bank raised interest rates on Wednesday by a half percentage point for a second time since July, as a surging dollar driven by aggressive U.S. rate hikes to tame inflation.

A 50 basis point hike put South Korea’s benchmark policy rate to 3.00%, bringing the total rate hike since August last year to 250 basis points.

The increase was in line with the consensus of 23 analysts from a total of 26 in a Reuters poll.


4) IMF slashes global growth next year to 2.7%, saying people will feel like facing recession

The IMF projects that global growth will slow to 2.7% next year, down 0.2 percentage points from its July forecast, and that many people will experience a recession in 2023.

According to the IMF’s World Economic Outlook, released on Tuesday, this is “the weakest growth profile since 2001,” surpassing only the peak of the global financial crisis and the Covid-19 pandemic. GDP projections for this year remained unchanged at 3.2%, down from 6% in 2021.