Daily Strategy for Investors on March 9, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on March 9, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

1) The Dow stock market plunged by 256.50 points (-0.98%). WTI crude oil price fell by USD4.62 (-10.07%) and gold price increased by USD4.4 (+0.26%).

2) Increased concern for the situation of COVID-19 virus is reflected by the rising gold price. 2-year, 10-year, and 30-year government bond yields have decreased.

3) Important factors had volatile movement this morning – at 7.30 a.m. Dow Futures decreased by 1,061 points (-4.1%). Gold price increased by USD27.9 (+1.67%).

4) WTI crude oil prices this morning decreased by more than 20%. The risk pressuring crude oil prices came from (1) Oil demand can be decreased after the COVID-19 virus impacted the global economy more than expected. (2) The overall oil supply is still oversupply. (3) The result of OPEC meeting was not as expected and (4) the announcement of the reduction of oil export prices of Saudi Arabia, so the market was worried that Saudi Arabia will increase production.

 

Stocks that benefit from lower crude oil prices – TASCO (TP Bt26.00), SCC (TP Bt396.00), PTG *(TP Bt19.70) and airlines such as AAV *(TP Bt2.57) and BA *(TP Bt9.57) *Source: IAA Consensus  

 

Follow important World Bank meetings. For the rest of March (1) ECB meeting on 12 March is expected to adjust the reserve interest rate of commercial banks deposits with ECB (Deposit Facility Rate: DFR at -0.6% per year (formerly -0.5% per year). (2) FOMC (Fed) meeting on 17 – 18 March, market still weighs the possibility of Fed cutting interest rates by 1-2 times in 2020. (3) BOJ (19 March) may increase the proportion of shares purchase (ETF). (4) The MPC is likely to cut interest rates and there is a high possibility that the rate will be reduced by at least 0.25% in this round of meetings and (5) The BOE is likely to cut interest rates by 2020, but it may not be this round.

FedWatch Tool of the CME Group weighed 71.6% of the possibility that the Fed will cut interest rates by another 0.5% to 0.5% – 0.75% in the 17-18 March meeting.

 

AWS forecasts the SET for this week (9-13 Mar) to be in the range of 1,319 -1,409 points and today expect the SET to be within the range of 1,352 – 1,372 points (with support at 1,359 1,352 and 1,344 points and resistance levels at 1,366 1,372 and 1,380 points).

 

Today’s analysis – Sector Update: Energy Sector / Company Update: CK

1) Energy Sector -We changed the oil price assumption for 2020 to USD45 per barrel so it will affect to the net profit and target price in 2020 of PTT and PTTEP, so AWS has negative view and give underweight.

2) CK – The profit trend for 2020 will grow 2.2%, while the growth opportunity is still open. Most recently, the company has entered the bidding for the 3rd runway construction, while the Skytrain Project (Red and Orange West) will start bidding in mid of 2020 and announce bidders at the end of 2020, Recommend “BUY” with a target price of Bt22.00.

 

Theme Investment: 

1) Accelerate the disbursement of the government budget in 2020. AWS chooses CK (TP Bt22.00), SEAFCO (TP Bt7.30), WHA (TP Bt4.40), and KKP (TP Bt80.00). 

2) Government stimulus measure, AWS favours AOT (TP Bt79.00), CPALL (TP Bt85.00), BEM (TP Bt12.50) and HMPRO (TP Bt19.00). 

3) Global trade has eased, AWS chooses CPF (TP Bt33.00). 

4) Interest rates cut. AWS chooses ORI (TP Bt9.00), SPALI (TP Bt20.00), MTC (TP Bt73.00), KKP (TP Bt80.00), and TISCO (TP Bt112.00).

5) High Dividend, AWS chooses KKP (Div.Yld.8.9%), QH (Div.Yld. 7.5%) TISCO (Div.Yld. 6.1%) BAFS (Div.Yld. 4.1%) and RATCH (Div.Yld. 4.1%)