Daily Strategy: SCBS Expects SET to Rally on Fed’s Tapering Signals, Slower Rate Hike

SCB Securities expected SET Index to continue the rally after Fed's signaled for tapering later this year and slower rake hike.

Stocks in Asia traded higher on Monday after the Fed showed signs of tapering asset purchase before the end of 2021, while saying that interest rate hikes are still ways off.

As of 9:40 local time in Thailand on August 30, 2021, Nikkei rose 0.28%, Shanghai Composite gained 0.36%, Hang Seng Index increased 0.30%, ASX 200 edged 0.05% higher, and IDX Composite hiked 0.66%.

Last Friday, SET Index closed at 1,611.20 points, increased 9.29 points or 0.58% with a trading value of 95.4 billion baht.


At the Jackson Hole economic symposium on Friday, August 27, 2021, the U.S. Federal Reserve’s Chair Jerome Powell signalled that the Fed could start tapering its current $120 billion asset purchases this year as the central bank is carefully assessing the risks from the Covid-19 Delta variant, while seeing interest rate hikes are still ways off.

As investors speculate on the asset tapering to give some signal on changes in policy rate, Powell cautioned that a move to start tapering asset purchases should not be interpreted as a sign that rate hikes would soon follow.

Still, the statement did not give a specific date on the beginning of tapering.


Mr. Ekpawin Suntarapichard, investment strategists of the Siam Commercial Bank Securities (SCBS), stated through “Kaohoon Jor Talad Program” on August 30, 2021, that the 1,590 – 1,600 points should be a support level for SET Index, expecting to extend its gain this morning in response to the Fed’s statement regarding the tapering and rate hike. Meanwhile, the Covid-19 situation in Thailand had a better outlook, coupled with lockdown easing. However, the SET Index could slow down this week after a sudden surge and long rally last week.

Mr. Suntarapichard added that the index could drop lower than the support level, but should not lower than 1,560 points, and advised investors for two-step investment, first on the support level around 1,590 points, and if the market continues to plummet, the second investment should be around 1,560 points. In addition, 1,675 points should be a good point to take profit.


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