Market Roundup 14 June 2023

1) Thai stock market overview

Thailand’s SET Index closed at 1,561.15 points, decreased 1.25 points or 0.08% with a trading value of 36 billion baht. The analyst stated that the Thai stock market moved narrowly after pricing in the U.S. inflation data while waiting for the Fed’s decision tonight as well as its guidance moving forward. The market also lacked positive factors and low trending volume.


2) IEA expects global oil demand to peak at 2028 as energy transition accelerates

Global oil demand will peak before the end of this decade as a result of advancements in electric vehicles, energy efficiency, and other technologies, according to IEA’s latest Oil 2023 medium-term market report.

Under present market and policy environments, the agency sees global oil demand to climb 6% from 2022 to 105.7 million barrels per day in 2028, driven by the petrochemical and aviation industries.

However, annual demand growth will slow from 2.4 million barrels per day in 2023 to 400,000 barrels per day in 2028.

The IEA also estimates that China’s pent-up demand will peak in mid-2023 after a 1.5 million barrels per day recovery, before dropping to an average of 290,000 barrels per day from 2024 to 2028.

The IEA expects non-OPEC+ oil producers, such as the US and other American producers, to “dominate medium-term capacity expansion plans.” IEA projects that global supply capacity would expand by 5.9 million barrels per day to 111 million by 2028, offset by a U.S. slowdown. Additionally, this will create a 4.1 million-barrel-per-day spare capacity buffer in OPEC giants Saudi Arabia and the UAE.


3) Global major banks cut Chinese yuan end-2023 forecasts

Global investment banks lowered Chinese yuan predictions as the currency slid below the 7-per-dollar mark, pressured from widening rate differentials with the US and expectations of more support to bolster the economy after Covid-19.

So far this year, the yuan has depreciated by roughly 4% against the dollar, making it one of Asia’s worst performers. On Wednesday, it was trading at its lowest price of 7.1643 per dollar.

J.P. Morgan reduced their 2023 yuan forecast from 6.85 to 7.25 per dollar. The bank stated that fundamentally negative carry will keep the currency under pressure, preventing CNY-supporting movements including bond inflows from overseas portfolio investors and corporate dollar sales.

Goldman Sachs forecast that the goods trade surplus will drop from its present high level over the next few months, regardless of the surplus’s low FX conversion ratio, while the services deficit would expand as international travel resumes.

Thus, the yield spread may not narrow as much as anticipated. China’s recovery has also been weaker than expected. This may slow portfolio inflows soon. UBS expects China’s yuan to fall to 6.9-7.0 from 6.8.