Daily Strategy for Investors on July 11, 2019

Asia Wealth Securities has made an analysis for the trading session on July 11, 2019 that it is likely to be that the Fed cut interest rate at the meeting at the end of this month; Property sector ought to be marked.

Thai Stock Market Today
– The Fed signaled to cut interest rate in the FOMC meeting yesterday. The market expects the Fed is probably to cut the rate by 0.50% at the meeting on 30-31 Jul.
– The BoT may well cut interest rate flowing by the Fed at the meeting on 7 Aug. There is the BoT’s meeting on 7 Aug 19. Asia Wealth, therefore, anticipates that the BoT is likely to cut the rate by 0.25%, from 1.75% to 1.50%, in accordance with the Fed at the next round meeting. This will benefit to Property, Power plant, and Finance and Hire-purchase sector.
– From the SCC’s meeting, it found that HDPE price is likely to weaken again. It is predicted to be below US$1,000 next week since supply is rising while demand was slow down. If the price of plastic granules is weak, it will be a positive factor for EPG, especially in July onwards. Asia Wealth revised the target price up from THB6.50 to THB7.20.

Asia Wealth is reiterating “BUY” rating on EPG (AWS sets the target price at THB7.20) and recommend holding on SCC (AWS sets the target price at THB480.00)

– The achievement of new government establishment will send a positive aspect to the market. Political stability is expected to continue to flow into the Thai stock market.
– The crude oil price has rebounded by 4.5%, resulting in the benefit of the energy sector. Asia Wealth recommends PTTEP.
– The SET is predicted to be around 1,730-1,750 points with recommending stocks of EPG, ORI, ANAN, and PTTEP.

The Stock Comments
EPG is a pick of the day
ORI       (AWS sets the target price at THB11.50) benefits from the downtrend of the interest rate.
ANAN   (AWS sets the target price at THB6.00) benefits from the downtrend of the interest rate.
PTTEP  (AWS sets the target price at THB162.00) benefits from the increase in crude oil price. It is expected that 2Q19 earnings may have high growth, outstandingly from the energy sector and petrochemical sector.

Pick of the day: EPG (THB6.60; BUY; AWS sets the target price at THB7.20)
EPG gains the benefit from HDPE and PP plastic resin prices continued to decline due to these products are important raw materials in the production. However, the earning in 1Q19/20 (April-June 19) affect from bath appreciation so the earning Asia Wealth forecasts the net profit to remain low at THB212million, but improve from THB112million in 4Q18/19.
Asia Wealth forecasts the earnings this year at THB1.1 billion from the positive factor which is the price of materials continued to decrease since 2Q19/20. Moreover, Asia Wealth revised the target price up based on the positive factors  (1) Plastic resin price have decreased. (2) Trade war has been resolved and the automotive industry is expected to recover.
Therefore, Asia Wealth recommended a BUY call with the new target price from THB6.50 to THB7.20 by adjusting a PER from 16.2x to 18.0x.
EPG’ price pattern is still the downtrend from Weekly &Monthly Sell Signal. However, EPG’s price pattern has already resumed its strength in Daily Buy Signal, and if EPG close above THB6.55, it will resume it strength in Weekly Buy Signal. Giving EPG’s price pattern, the first target is THB7.50 and THB9.00, respectively. The stop-loss point is at THB6.00. Asia Wealth set the resistance line at THB6.70, THB6.80, and THB 7.05 while the support at THB6.50, THB6.40, THB6.15.

Foreign Market: US Stock Market
DOW rose 76.71 points or +0.29%, while Nasdaq increased 60.80 points or +0.75% and S&P500 also was up 13.44 points or 0.45% after Jerome Powell, chair of the Federal Reserve, signaled an interest rate cut to Congress, so, the investors believe that the Fed will cut the interest rate by 0.50% in the meeting between 30-30 Jul 19.
Furthermore, the survey shows that Fed Warch which is the analysis of CME Group’s US interest rate future contract indicates that investors forecast that 100% chance that the FED will cut the interest rate in the meeting at the end of Jul 19.

Commodities:
Crude oil prices: WTI for August delivery rose USD2.60, or 4.5%, closing at USD60.43/barrel; Brent for September delivery also increased USD2.85, or 4.4%, closing at USD67.01/barrel after EIA revealed that the US oil inventory decreased 9.5 million barrels on 5 Jul 19, while analyst expected that it will reduce only 2.0 million barrels. Moreover, the oil price has been boosted from the NEWS of the storm in Mexico.