Kaohoon Morning Brief – 28 November 2022

1) FSS expects negative session in Thai stock market amid plummeting oil prices

Finansia Syrus Securities (FSS) expected the SET Index to extend its sideways-to-sideways-down movement within 1,610-1,625 points. Energy should weigh on the market, in line with extended crude price losses due to concerns over the covid situation, the lockdown, and the protest against the zero-covid policy in China. Since they could affect economic recovery, PBOC cut its RRR by 0.25%, the second time this year, which will inject 500bn yuan into the economy. FSS expected anti-commodity to see continued benefits due to continuously lower cost pressure in 4Q22-2023.

On the local front, investors should monitor the export figure for October and the MPC meeting on November 30. FSS expected the committee to raise its benchmark rate by another 0.25% to 1.25%, in line with the economic recovery. Also, the Constitutional Court will rule on party-list seats based on the organic bill on political parties. In the short run, the market still waits for fresh catalysts. However, FSS maintained its long-term bullish view of the economy and fund flows. They should flow into the country in the mid-to-long run.


2) Taiwan’s Tsai Ing-wen resigns as party head after loss to Kuomintang

Taiwan President Tsai Ing-wen announced her resignation as head of the ruling Democratic Progressive Party on the weekend after her loss in local elections as the main opposition party the Kuomintang (KMT) claimed victory in 13 of the 21 mayor seats up for grabs. The opposition party even won the seats in Taipei.


3) China frees CNY500 billion of banking reserve to buoy economy

China’s central bank announced a cut to the amount of cash that banks must hold as reserves for the second time this year, which would result in releasing about 500 billion yuan ($69.8 billion) in long-term liquidity to support an economy damaged by surging Covid cases and a crumbling property sector.

The People’s Bank of China said in a statement on Friday that the reserve requirement ratio for most banks will be reduced by 25 basis points.


4) JPMorgan expects $1 trillion demand boost in global bond next year

JPMorgan expected global bond yield to slightly shrink in 2023 as the balance between demand and supply will improve by $1 trillion. The firm estimated deterioration of about $700 billion in demand next year, compared to 2022. Meanwhile, bond supply will likely drop by $1.6 trillion.

JPMorgan said that the worst may soon be behind global bonds after bonds have slumped around the world this year, leading to the first bear market in a generation.