Kaohoon Morning Brief – 5 January 2023

1) FSS expects anti-commodity plays to continue outperforming from lower energy costs

Finansia Syrus Securities (FSS) expected Thailand’s SET Index to move in sideways to sideways-up trend within 1,665-1,680 points, while the energy sector is expected to continue pressuring the market as Brent crude fell by 5% yesterday to $77.84 per barrel. Despite falling oil prices, FSS expected anti-commodity plays such as power plant, construction material as well as consumer-related stocks should continue to outperform from lower energy costs. High purchasing power would indirectly benefit the Thai economy, especially on the consumer side that should be the main driver this year.


2) Fed expects interest rate to remain high for a while

The U.S. Federal Reserve affirmed their resolve to tamper inflation, while expecting higher interest rates to remain in place until more progress is made, according to the FOMC December minutes.

The increase ended 2022 with a 50 basis point increase, ending its four consecutive three-quarter point rate hikes, taking the target range for the benchmark fed funds rate to 4.25%-4.5%, the highest level in 15 years.

Going into the meeting, markets were pricing in rate cuts in H2 2023.


3) China to ease coal ban on Australia

China is close to partially lifting its ban on Australian thermal and coking coal imports, as reported by Bloomberg citing people familiar with the matter.

Four major importers are reportedly on a proposal by China’s National Development and Reform Commission to restart their imports in 2023. The four companies are China Baowu Steel Group Corp., China Datang Corp., China Huaneng Group Co. and China Energy Investment Corp.

The move came as China is looking for alternative sources for obtaining more coal for its power and steel plants amid disruptions caused by the Russia–Ukraine war.


4) Oil prices plunged 5%, pressured by weak global demand

Oil prices plunged sharply on Wednesday as demand concerns over global recession and surging Covid spread in China pressured the market.

The international benchmark Brent crude fell $4.26 or 5.2% to close at $77.84 per barrel, while the West Texas Intermediate dropped $4.09 or 5.3% to close at $72.84 a barrel.

Brent crude had its worst two-day loss at the start of the year since January as the benchmark fell 9.4%.