Daily Strategy for Investors on June 9, 2020

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

 

Investment Ideas:

Investment Overview Today – The SET Index is still volatile. The risk of valuation is returning to pressure the investment overview, especially stocks in the energy sector that have outperformed the market. AWS recommends taking profit to reduce risks in the short-term. Domestic factors that are still slightly positive are the Ministry of Finance issuing measures to stimulate consumption and tourism in the country and strengthen Thai baht.

 

Follow the Fed meeting on 9-10 June – The market expects the Fed to maintain interest rate at 0% – 0.25%, but the interesting issue is the Fed’s view on economic trends, as well as future interest rates. Previously, the Fed used financial instruments by implementing QE with unlimited amount and time in addition to the fiscal tools that the government chooses to inject with a total of USD2tn (10% of U.S. GDP).

 

Oil price downside risk – Upside is limited after the oil price has increased by more than 65% from the end of 1Q20 due to expectations of a recovery of demand and a reduction in production capacity. AWS estimates that the trend of crude oil prices will return to be risky due to (1) Saudi Arabia attitude which expects to return to increase production after reducing the production capacity beyond the quota, especially in June that they reduced production by an additional 1.18 million barrels per day,  (2) The increase in oil prices which persuade Shale oil producers in the U.S. to resume production, and (3) the refinery utilization rate in U.S. refineries that have not recovered. The refining rate between April-May was 71%, lower than the 5-year average of 91%, reflecting the recovery of oil prices. As a result of speculation rather than fundamental factors, AWS recommends taking profit on stocks in Theme Investment that benefit from rebounded crude oil prices.   

 

The measures to stimulate consumption and tourism are the factors supporting AWS investment theme – Yesterday (8 Jun), the Deputy Prime Minister assigned the Ministry of Finance to issue measures to stimulate consumption and tourism in the country. From this point, AWS expects to see new measures in 3Q20 and look at these issues to support AWS theme investment regarding stocks benefit from government measures (Investment framework 1 – 2 months).

 

Interesting the U.S. economic data for this week (8 – 12 June) – The NFIB’s Small Business Confidence in May, the amount of wholesale inventory reserves in April, the number of applications jobs and labor turnover rate (JOLTS) in April, the consumer price index (CPI) in May, the number of weekly jobless claims, the producer price index (PPI) in May, the import and export prices in May, and initial consumer confidence in June from the University of Michigan.

 

Technical View – Today, AWS expects the SET index to move in a range of 1,428 – 1,452 points (with support at 1,428, 1,416 and 1,402 points and resistance levels at 1,444, 1,452 and 1,466 points). The recommended stocks are TKN, BCPG, PRM, STEC, and MINT .

 

Theme Investment

1)Accelerate the disbursement of government investment budget – CK, STEC, SEAFCO, PYLON, and TASCO

2)Stocks that benefit from entering rainy season – BCPG,BGRIM, CKP, GPSC, and EASTW

3)Stocks that benefit from government measure – ADVANC, BTS, BEM, CPF, CPALL, BJC, CRC, CPN, PLANB, HMPRO, OSP, and CBG

4)Long-term cumulative shares (DCA) – ADVANC, AOT, BDMS, BEM, CPALL, DIF, and HMPRO

5)SSFx target stocks – PTT, PTTEP, BJC, CPALL, AOT, GULF, EGCO, INTUCH, ADVANC, BAM, and BDMS