Marketwatch

Stock market volatility across the world in the past two weeks reflects global market fragility as opposed to previous sharp spikes in global trading driven by high price-to-earnings (P/Es) from excessive liquidity in the system. From now, excessive liquidity will continue to decline following the uptrend in interest rates, while the US-China trade war is escalating. The Thai bourse could see negative investment sentiment and a lack of capital inflow in support of equities. Thailand remains strong even though lower Thai export growth has begun to register a decreasing rate in light of the trade war. The SET Index is forecast to move below 1,700 points this week. 
The ECB is expected to confirm an end of its quantitative easing (QE) later this year and hold its benchmark rate at a low level until the middle of next year in its October 25 meeting, reflecting gradual monetary tightening. On October 26, the US is expected to announce GDP growth of 3.3 per cent for the third quarter (annualised), lower than the second-quarter growth of 4.2 per cent (annualised).
If the 3Q/18 US growth figure turns out to be higher than expected, concerns over the Fed’s planned rate hikes will mount again which could boost bond yields and pressure down global stock markets.
Investment strategies come in two styles, starting from high-dividend stocks to defensive stocks amid the trade war. We weigh on property stocks as their prices have been overpressured by the Bank of Thailand’s measure on loan-to-value (LTV) reduction. Due to sharp drops in prices and estimates of outstanding 2H/18 results, some property stocks such as LH, LPN, PSH and QH give dividend yields of over 6 per cent. Besides, some relaxation of the LTV measure is expected.
Although the trade war negatively affects the economy, some enterprises may gain through restructuring of their supply chains.
For example, SAT (fair value @Bt29) has received new orders from tier1 companies to produce rear axles for pickups worth Bt70 million in 4Q/18 and Bt400 million in 2019. 
SAT’s estimated net profit has been revised up to 32 per cent in 2018 and 10.1 per cent in 2019 despite its price having dropped to as low as 18 per cent since August. Its price to earnings ratio is 8.6 times lower than the group average of 12 times while its dividend yield is projected at 5.5 per cent. – Therdsak Thaveeteeratham, executive vice president/research, Asia Plus Securities

A fullblown crisis 
may occur next year
From the start of this year to October 17, 2018, US 10-year bond yield climbed 80 basis points to its seven-year high, raising concerns of the Fed possibly hiking its fed funds rate faster than expected and triggering profit-taking in the US stock markets in the periods February 18 and October 3-11 this year.
In our view, sharp rises in the US 10-year bond yield have not yet reached the dangerous point as the recent rises have been in line with the US inflation rate, as seen from the gap of US 10-year bond yield and headline consumer price index at lower than 1 per cent and below the average of 1.31 per cent since 2000.
Historically, before US market corrections or the 2009 Hamburger crisis, the gap was between over 1.3 per cent to 5 per cent. Now, the gap is 0.6 per cent, lower than the average and the pre-crisis level. The US stock market could still go up further.
Although US inflation is not too high, we should be cautious over the estimated US inflation by consensus in the next two years which could rise faster than the US GDP growth (inflation will likely rise faster than GDP growth in 3Q/19.). But we believe the risk to growth will not be as severe as the pre-Hamburger crisis period during 200708 when US inflation was driven by cost push and rose nearly 6 per cent higher than the US GDP growth.
Another sign of risk to global economic growth next year is the global purchasing managers’ index, including those of the Europe and China. All have declined continuously from 4Q/2017. Only the US PMI has increased, due likely to the tax cut policy. However, a global economic slowdown could drag down the US economy next year.
Forward price-to-earnings ratio of S&P500 Index usually moves in contrast with the fed funds rate.
In 2017, long-term interest rates and inflation did not hinder the rises at both the US and Thai stock markets. 
Meanwhile, market cap of large-sized firms in the US (W5000) compared to the GDP has been close to 200 per cent, and market cap of firms in Nasdaq compared to the GDP has been over 50 per cent, the levels similar to those when the Dot.Com crisis erupted, followed by the Hamburger crisis. 
Now, the US stock market is full of tech businesses, tech platforms and tech startups, quite similar to that in the period of 2002-2009 when Internet businesses and websites swelled the market. New financial products. such as digital currency had yet to arrive then. 
During 200708, the US suffered a crisis on financial products: mortgage-backed security; collateralised debt obligation and credit default swap. We should not neglect these signs. – Prakit Sirivattanaket, vice president, Kasikorn Securities