Kaohoon Morning Brief – 17 November 2022

1) FSS expects sideways trends for SET Index without fresh catalyst after 3Q22 earnings season

Finansia Syrus Securities (FSS) expected the SET Index to move sideways within 1,610-1,630 points. The market lacks fresh catalysts to provide support after the 3Q22 earnings season is over. The index should ease in the short run after responding positively to the lower U.S. inflation and the anticipation that the Fed would slow down its rate hikes, which is probably close to its peak at 5% in 1Q23. The latest Dollar Index and U.S. 2Y bond yield were flat after tumbling a week ago. However, the 10Y return extended its losses, widening the inverted yield to -67 bps from -44 bps at the end of 3Q22. It reflected concerns over the economic outlook and higher recession risk. However, FSS believed the SET’s losses will be lesser than its international peers due to its accelerating economy, particularly tourism.

As a result, FSS anticipated strong profit recovery for listed companies in 4Q22-2023. Also, the return of a long-term current account surplus should support a rising Baht outlook. Despite the short-term fund outflows, the picture still supports mid-to-long-term fund inflows.


2) Republicans take control of US House, setting stage for divided government

Republicans have won the majority in the U.S. House of Representatives, setting the stage for a divided government in the next two years as President Joe Biden’s Democrat Party holds control of the Senate.

According to data reported by Refinitiv after more than a week of ballot counting, the Republican Party has taken over the majority in the lower house after flipping 18 seats to gain 218 in the midterm election. The bluewave gained 211 seats in the House, while the remaining six have yet to be announced, that would not change the outcome.

The victory gives Republicans the power to rein in Biden’s agenda, launch probes of his administration and family, in which Republicans could not do so before due to the lack of majority in the House.


3) Hang Seng drops 2% on report of Tencent offloads Meituan

Hong Kong’s Hang Seng Index fell more than 2%, dragged by the recently red-hot tech index after a Chinese multinational technology company Tencent announced to slash its stake in Meituan, a Chinese shopping platform.

Tencent said that it will return capital to shareholders through a special dividend distribution of its $20.3 billion stake. The tranche of shares is roughly 90.9% of its stake in Tencent and 15.5% of total shares Meituan has issued as of Oct. 31.