Daily Strategy for Investors on August 15, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session in August 15, 2019, pointing out some of the must-know events in the equity market as follows:

Thai Stock Market Today:
1) US stock market plunged sharply due to concern on the Inverted Yield Curve situation.  The 2-year US government bond yield was at 1.630%, while the 10-year US government bond yield was 1.623%. This indicates a recession. Bank stocks fell heavily.  

2) Four Thai commercial banks announced an adjustment to cut MOR-MRR interest rate by 0.25% leading by KBANK then followed by KTB, BBL and SCB. As a result, stock market yesterday afternoon plunged from a positive territory at 10-20 points to close in negative territory.

3) Oil prices plunged – freight rates rose. It is expected to be a result from supply shortage -VIX surpassed 20 points to 22.10 points or +26.14%

 

4) Today’s investment strategy: still recommend to avoid bank stocks as a negative factor from interest rate cuts has affected this group directly. Recommend to hold cash around 50% -60% cash and wait for the timing to buy strong stocks once their price become weaken. AWS still like AOT, BEM, CPALL, ADVANC, GPSC and pick as a Core Port.

Pick of the day: INTUCH recommended “BUY” with IAA Consensus target price of ฿71.68.
INTUCH:  AWS has a positive view on INTUCH after ADVANC’s 2Q19 performance has improved QoQ due to the cancellation of Fixed-Speed Unlimited package. As a result, ADVANC’s APRU revised up to THB 263 compared to THB 253 in 1Q19. Internet business also grows higher. In addition, for InVent of which the company invests in Startup, sold Digio for a total of THB 108mn, representing 13.5% IRR during the investment period. The company announced to pay an interim dividend of THB 1.00 per share and XD on 19 August 2019.
INTUCH remains strong as its main trend is in a full uptrend from the occurrence of Daily, Weekly, and Monthly Buy Signal. Giving INTUCH, the initial target is THB65.25. If it is able to close above THB 66.25, the next target would be THB 71.25 and the significant target would be THB 77.50, respectively. The short-term stop loss point is at THB 62.75.

Foreign Market:
The U.S. stock market: Dow plunged 800.49 points or -3.05%, while S&P500 was down by 85.72 points or -2.93%, NASDAQ plunged 242.42 points or -3.02% after the US bond market experienced the Inverted Yield Curve where the return rate of short-term bond yield is higher than that of long-term one. 
The 2-year US government bond yield was at 1.630%, while the 10-year US government bond yield was at 1.623% indicating a recession. Bank stocks fell sharply as a result of lower interest rate and concern on the Inverted Yield Curve in the bond market. In addition, the market was also pressured by weak economic data in many countries including Chinese industrial production in July with only 4.8% growth which is the lowest in 17 years and Germany’s gross domestic product (GDP) that contracted in 2Q19.