SET jumps briefly as Fed hikes rate
The Thai stock market rallied yesterday in morning trade, following a bounce on global stock markets after the Federal Reserve announced a half-point interest rate hike as expected and insisted it is not considering bigger increases.
The Dow Jones gained nearly 1,000 points following the news, while the SET Index rose to 1,667.12 points, up 14.83 points in the morning session. The SET closed at 1,643.30 points, down 0.54% in trade worth 77.5 billion baht.
Analysts at Finansia Syrus Securities recommend investing in tourism firms and stocks that will benefit from the country’s reopening, while the energy sector should benefit from higher crude oil prices after the EU bans Russian oil. The local gold price rose 250 baht yesterday morning in line with bond yields, while the baht dropped to 34.04 to the US dollar.
Kobsak Pootrakool, senior executive vice-president at Bangkok Bank, said the Fed also decided to cut about $95 billion per month from its balance sheet, while reassuring markets that “a 75 basis-point increase is not something the committee is actively considering”.
The Fed has an optimistic view of the US economic recovery, expecting the US economy to grow more than 2%, Mr Kobsak said.
Finansia expects foreign funds to enter the Thai market in the second half this year as the economy begins to recover, boosted by the easing of travel restrictions and measures to curb the pandemic.
The brokerage recommends domestic stocks with low price-to-earnings ratios and price-to-book values compared with pre-Covid levels, such as those in banking, refineries, retail, real estate, food and beverages, and medical.
Paiboon Nalintrangkurn, chairman of the Federation of Thai Capital Market Organizations (Fetco), said the Thai stock market remains attractive because of its low valuation and high recovery prospects based on the country’s reopening.
He recommended holding some gold in a portfolio to hedge against risks from the war in Ukraine.
Mr Paiboon said Fetco reduced its SET Index forecast this year from 1,800 to 1,750 points, expecting Thai GDP growth of less than 3% as higher inflation curbs purchasing power.