Kaohoon Morning Brief – 15 August 2023

1) KSS expects weak movement for SET Index as markets show concerns over China’s economy

Krungsri Securities (KSS) expected Thailand’s SET Index to weaken at the range of 1,525-1,530 points in concerns of the property sector in China after Country Garden Holdings defaulted on its U.S. bonds and the slowdown of China’s economy as bank’s loans in July plunged to 14-year low. Concerns for the Chinese economy pressured oil prices to edge lower, posting a negative sentiment to the energy sector short-term.


2) Chinese property development Country Garden defaults on US bonds

Country Garden Holdings, a Chinese property development company listed in Hong Kong Stock Exchange, led to plummet on Monday with a drop over 14% in the morning session to a record low after the company announced that it will suspend the trading of 11 onshore bonds from Monday.

“During the suspension, the company will perform information disclosure obligations in strict accordance with the requirements of relevant laws and regulations, and will apply for resumption of corporate bonds in a timely manner after relevant matters are determined,” Country Garden Holdings wrote in its statement.


3) PBOC cuts MLF rate by 15bps to 2.50% to boost economy

The People’s Bank of China surprised the market with a rate cut on 401 billion yuan ($55.25 billion) worth of one-year medium-term lending facility (MLF) loans by 15 basis points to 2.50% from 2.65% previously.

The Chinese central bank also cut the seven-day reverse repo rate to 1.8% from 1.9% prior.

The cut showed signs that the central bank is moving on to boost its economy that has been underperforming most of the entire year.


4) Japan’s 2Q23 economy largely beat expectations with 6% growth

Japan’s economy recorded its third straight quarterly growth with an annualized 6% expansion in the second quarter of 2023, largely beating expectations of 3.1% growth by economists surveyed by Reuters. On a quarterly basis, Japan’s economy grew 1.5%, also beating expectations for a 0.8% growth.