Kaohoon Morning Brief – 8 March 2023

1) FSS recommends accumulating stocks at 1,600 or lower for mid and long-term investment

Finansia Syrus Securities (FSS) expected Thailand’s SET Index to move in a sideways to sideways-down trend within 1,605-1,625 points, pressured by the Fed’s statement to the Congress, saying that the central bank expected higher interest rates than it previously anticipated. The market is currently looking toward a terminal rate of 5.50-5.75% by June, while the dot plot in December is at 5-5.25%.

FSS recommended investors to speculate stocks with individual catalysts. For the mid and long-term investment, the analyst recommended accumulating stocks at the index point around 1,600 or lower.


2) Markets expect 50bps hike by Fed after the testimony

Fed’s chairman Jerome Powell made a comment as he addressed the Congress on Tuesday, saying that interest rates are likely to be higher than the central bank had expected, citing data earlier this year indicating that the trend of rising prices has reversed the deceleration that it showed in late 2022, which made policymakers believed that the end was near.  Due to this reason, the chairman warned that tighter monetary policy up ahead could slow a growing economy.

After the statement, the CME FedWatch Tool shows a 48.4% probability of a half-percentage point of rate hike at the meeting later this month, up from 30.6%. A month ago, the probability for a half-point increase was only 3.3%.


3) Goldman on Bank of Japan meeting (Thursday/Friday)

Goldman Sachs stated that it expected the Bank of Japan (BOJ) to maintain its ultra-low interest rate at the meeting on Thursday and Friday, which would be before the end of its fiscal year and the initial results of the Shunto wage negotiations.

In the meantime, the effort from the central bank in widening of the Yield-Curve Control (YCC) in December, the bond market functioning has continued to deteriorate.

Therefore, Goldman Sachs thought that it is possible that Governor Kuroda could amend YCC this week at the meeting to lessen the burden on his successor in the coming month.