Daily Strategy for Investors on April 19, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on April 19, 2019, stating on SET yesterday moved in a tight range, driven by selling pressure on IVL, SCB and WORK. Power plant stocks were bought further led by EA, GULF and EGCO.

The index closed at 1,675.0 points (+1.8 points) with a trading value of THB 47 billion, (THB 52 billion the previous day). Foreign investors continued to net sell Thai shares by THB 1.1 billion, institutional investors net bought by THB 1.5 billion. There were net short on the SET50 index future by 12,064 contracts.

 

Investment Theme: Chinese key economic data gives a positive sentiment
The MSCI emerging market rose 3.3% in April, thanks to 1) central banks like FED, ECB became more dovish on monetary policy again. FED halted its interest rate hike plan for this year while reducing balance sheet cut plan. ECB also postponed its interest rate hike and launched TLTRO measures, 2) China reported better than expected key economic data such as PMI Manufacturing, Fixed asset investment and recently GDP, and 3) China launched economic stimulus measures via fiscal policy by cutting VAT(%), targeting budget deficit to increase 2.8%/GDP, and boosting domestic consumption.

These factors help ease concerns over the economic slowdown of the world’s second-largest economy like China. It also presents a mild positive sentiment to investment in the emerging markets as well. For domestic factors, Maybank believes the political situation should stay still until the calculation formula for the party list MP is announced. Strategically, Maybank recommends letting profit run. For the banking sector’s earnings results, most banks reported earnings in line with the market forecast with TCAP and KBANK beating forecast. Maybank shall proceed with the banking earnings results summary next week.

 

April Investment Theme
The SET in April should swing in the uptrend channel with a range of 1,630-1,680 points. Recommend investors holding cash not less than 40%. HOLD PTTEP, BEM and BJC.

 

Big Issue
1) The Constitutional Court undecided on party list seat calculation formula.

 

Stock Pick & Trading Idea
Maybank recommends trading buy PTT, expecting 1Q19 earnings to rise QoQ, due to the recovery of the refinery and petrochemical operations, stock loss turning to profit, as well as the net profit of PTTEP that is expected to recover QoQ after no extra expenses.

In addition, the main business of PTT also benefited from an increase in oil prices through increased margins in the supply of gas for industrial customers. The share price YTD is laggard the Energy sector by about 5%. The target price is THB 55.0. Technically, if passing the upper band at THB 49.50, the trend is positive (support THB 47.00, resistance THB 49.50).

 

Technical View: Likely to retrace, but if stays above 1665, may manage to hold above 1675 again
The index continued recovering and testing 1675 but with declining volume. So it may retrace again. Keep an eye on it retesting the sub support level at 1665. If holds, the index is likely to surpass the neckline 1675 to form the inversed H&S again. But if it dips below 1665, the key support should be 1655 (EMA 200 Day). If it dips through such level, the momentum of recovery will be deteriorated.

 

Investment Strategy
1) Investors with stocks, if passes 1675, let profit runs until it reaches resistance 1690. If it retraces, use 1665 as a lock profit spot.
2) Without stocks, gradually buy stocks at support levels 1665-1655 or wait to buy if it passes 1675.

 

Maybank sets a support line at 1665 points and 1655 points while setting a resistance line at 1680 points and 1690 points.

 

Keep an Eye on
1) The Constitutional Court to rule on the formula to calculate party-list MP.