Kaohoon Morning Brief – 25 October 2022

1) FSS sees continuing economic recovery as domestic and reopening plays remain attractive

Finansia Syrus Securities (FSS) expected the SET to move sideways-up to test 1,600 points due to the fund inflows into risk assets after the Fed may discuss a lower rate hike in December. It made the Dollar Index and U.S. bond yields slow after surging to their peak since 2008 last week. Although the re-election of Xi Jinping as China’s President for the third term and his zero-covid policy may affect the global economic recovery and Thailand, particularly its tourism, FSS maintained its bullish view of its fundamentals. The domestic economic recovery remains upward and is accelerating. It should support the index to outperform its regional peers.

The market should focus on the real sector’s earnings preview and season in the short run. More are coming this week. FSS still prefered domestic and reopening plays in 4Q22-2023 and believe they should outperform the market.


2) Rishi Sunak to become UK’s next prime minister

The former candidate for the British prime minister just seven weeks ago, Rishi Sunak, is set to become the next leader of the United Kingdom after the resignation of Liz Truss.

Sunak will be named the new prime minister after his sole competitor, Penny Mordaunt, dropped out of the race on Monday afternoon in which the former Prime Minister Boris Johnson took an initiative to withdraw on Sunday.


3) Japan might fail in an attempt to intervene FX market

Japanese policymakers were suspected of intervention in the FX market on Friday and Monday with a record of around 5.4 trillion-5.5 trillion yen (approx. $36.16 billion-$36.83 billion). However, the attempt to intervene in the market did not buoy much of the Japanese yen.

The currency is trading near its 32-year high of around JYP149 to 1 USD.


4) Market is expecting 75bps rate hike by the Fed in December

The market’s expectations for the U.S. Federal Reserve rate hikes turned more hawkish on Friday as the odds for 75bps rate hike in December rose to 40% from 30%. That would be after a 75bps rate hike in November that the market largely expected the central bank to deliver.