Kaohoon Morning Brief – 21 August 2023

1) KSS expects uncertainty of Fed’s rate hike would continue to weigh on the market

Krungsri Securities (KSS) expected Thailand’s SET Index to move between 1,510-1,530 points. The brokerage firm stated that a rise in oil prices from tight supply and hopes for forming a Thai coalition government would be overshadowed by the uncertainty of U.S. Federal Reserve’s rate decisions. A selloff to de-risk before the Jackson Hole Symposium on 24-26 August would also put pressure on the market.


2) China cuts 1-year LPR by 10bps, but leaves 5-year loans unchanged

China’s central bank cut its 1-year loan prime rate (LPR) on Monday by 10 basis points to 3.45% from 3.55%. The decision was primarily for household and corporate loans in China. This was China’s second cut in three months, but was still 15bps lower than economists forecast polled by Reuters that expected a total of 25bps cut for 1-year LPR.

Meanwhile, the People’s Bank of China surprised the market by maintaining a 5-year LPR at 4.20% when economists expected a 15 basis point cut over default risks from its property sector such as Country Garden and Evergrande.


3) Thailand’s 2Q23 GDP expands slower-than-expected amid soft global demand

Thailand’s economy grew smaller than expected in the second quarter of this year amid weaker exports and slowdown in global demand, despite the help from the recovering tourism sector.

According to the data released by the National Economic and Social Development Council (NESDC) on Monday, Thailand’s gross domestic product (GDP) expanded 1.8% in the April-June period from a year earlier, which was below the 3.1% growth forecast in a Reuters poll.

Exports, which is a key driver of growth for the second-largest economy in Southeast Asia, have contracted since October 2022, due to soft global demand, especially from China, who is Thailand’s major trading partner.