Daily Strategy for Investors on March 14, 2019

Maybank Kim Eng Securities has made an analysis of the trading session of March 13, 2019, stating that SET sharply gained in the afternoon session driven by strong buying pressure on power plant stocks led by EGCO, RATCH, BCPG and GULF including big caps AOT and CPF. The newest listed GSC saw 47% gain on the first-day trading.

The index closed at 1,639.6 points (+12.0 points) with a trading value of THB 45 billion, up from THB 37 billion the previous day. Foreign investors switched to net buy Thai shares by THB 290 million after 13 days of selling. Funds continued to net buy by THB 274 million. There were net long on SET50 index future by 4,708 contracts.

 

Investment Theme
The SET in March should swing in a range of 1620-1680 points +/-. The market is expected high volatility in March due to political factors both domestic and global. Recommend hold cash no less than 40%. Focus on power plant (EGCO) mass transit (BEM), tourism (SPA), retail (CPALL) and PTTEP is a global play stock.

 

Big Issues
1) Commerce Ministry reported new business registration dropped 10% MoM in February.
2) Brent rose to USD 67.6 after EIA reported a drop in crude inventories to 3.9m bbl (expected to rise by 3.3m bbl) US production down by 100k bbl to 12m bbl.

 

New Land and Building Tax law enforced
The Royal Gazette on Tuesday announced the enforcement of the new land and building tax law BE 2562 placing property into 4 categories based on use, and sets the tax rates based on the appraisal value of the property as follows: Agricultural use with a tax ceiling of 0.15%, Residential use with a tax ceiling of 0.3%, Commercial use with a tax ceiling of 1.2%.

The overall is in line with Maybank’s previous view citing that there is limited impact to the actual residents. The law will be effective from 1 Jan 2020 onwards. Those who will be affected most are the landlords who don’t use the land usefully, especially the land with high value and those who own many houses.

However, many property developers don’t collect land bank so that they are not affected much by this law. At the same time, Maybank may see empty land put on sale, especially in the city area which may offer the opportunity for developers to buy more land bank to develop more projects in 2H19.

 

Technical View
More positive outlook, but the major trend remains sideways in a range of 1630-1660: The SET index sharply gained driven by strong buying pressure on big caps of all sectors. The index is likely to break out the sideways’ resistance in a short term. Coupled with the MACD and Modified Stochastic indicators hinting a buy signal, therefore the positive outlook should continue. However, Maybank believes the index may swing sideways in a range of 1630-1660. If rebounds, take profit at resistances 1645 and 1660. The trend may shift to uptrend again once the index breaks the resistance 1660 (EMA200Day).

 

Investment Strategy
1) Investors with stocks, if rebounds, take profit at resistances 1645 and 1660.
2) Without stocks, if weakens but holds above the supports 1630-1635, accumulate buy stocks for trading and profit taking at resistance zone.

 

Maybank sets a support line at 1623 points and 1630 points, while setting a resistance line at  1645 points and 1660 points.

 

Keep an eye on
1) Trump to meet Xi Jinping on trade war talks on March 27.
2) Progress on high-speed trains linking three airports bidding on March 19.
3) Thai election on March 24.