Daily Strategy for Investors on March 2, 2020

Maybank Kim Eng (Maybank) released an analysis for the trading session on March 2, 2020, indicating the essential events in the stock market as follows:

 

Market Summary

1) The SET on Friday continued plunging on escalating fears of COVID-19 outbreak out of China, which saw numbers of confirmed cases accelerating. The SET index closed at 1,340.52 (-54 points) with a trading value of THB86b (THB74b the previous day).  

2) Foreign investors net sold Thai shares by THB300m. Institutional investors net sold by THB1.365b. There were net Short on SET50 Index Futures by 13,010 contracts.

 

Stock Picks & Trading Idea

CHG (TP THB3.20): CHG remains our top pick of the healthcare stocks. Mabank expects the core earnings for 2020 to jump +24%YoY due to 1) two new hospitals turnover to profit, 2) increase in SSO budget since the early 2020, 3) a growth of existing hospitals.

   

Investment Theme

2020 GDP growth cut to 2% amid risks of escalating COVID-19: The COVID-19 outbreak is escalating, especially outside China. There are more risks in many regions such as Asia (South Korea, Japan, Singapore, Hong Kong, Thailand, Taiwan), Europe (Italy, Germany, France, Spain) and the Middle East (Iran, Kuwait, Bahrain). Moreover, Maybank still needs to keep an eye on the USA closely (Control has been lifted in some states). Maybank expects this to remain an important issue that pressures the growth of the global economy, including Thailand as it is forecast to be hit hard by the tourism sector contracting in the first half, the supply chain from China is disrupted, including declining demand from China. Consequently, they are likely to affect the production and exports of Thailand. And there are still additional risks in agriculture from the worst drought in 40 years, which is expected to pressure until at least in the middle of this year. Therefore, as a result of this risk, we have lowered our forecast for Thai economic growth this year (GDP) to +2.0% from original +2.8%, which is considered near the median of GDP framework that the National Economic and Social Development Council (NESDC) predicted in the range of 1.5% -2.5%. However, with various negative factors pressuring the growth of the economy, Maybank expects there will be more opportunities for The Monetary Policy Committee (MPC) is likely to cut interest rates by another 0.25% to a record low of 0.75% during 2Q20.

      

Investment Strategy: Maybank  estimates the support level of the SET index today at 1320 and resistance at 1360. For low-risk takers, wait and see until the COVID-19 outbreak outside China clearly eases. Limit your capital by 20% to trading buy on stocks with limited impact from COVID-19 (CHG, OSP, TU).

 

Big Issue 

1)The Royal Gazette announced Covid-19 has been labelled a dangerous contagious disease and takes effect on March 1

2) US Confidence Index was 101 in Feb, expected 100.7, according to University of Michigan Surveys of Consumers Report

3) China PMI Manufacturing was 35.7 in Feb, forecast at 45

 

Eyes on

Last week of earnings results announcement

2 Mar: Thailand PMI Manufacturing

2 Mar: Feb PMI Manufacturing (US, China, EU)

3 Mar: CPI Eurozone (Feb)

4 Mar: Feb PMI Services (US, China, EU)

5 Mar: Thailand Consumer Confidence Index (Feb), Thailand CPI (Feb)

5 Mar: US Factory purchasing order (Jan), US Durable purchasing order (Jan)

6 Mar: US Nonfarm (Feb), US trade balance (Feb)

 

Technical View

SET    Support : 1300/1320 and Resistance : 1355/1365