Daily Strategy for Investors on July 16, 2020

Maybank Kim Eng (Maybank) released an analysis for the trading session on July 16, 2020, indicating the essential events in the stock market as follows:

 

Market Summary

1) The SET yesterday regained positive developments of the vaccine, boosting speculation on risky assets markets. The SET index closed at 1,354.31 (+13.24 points) with a trading value of THB59b (THB64b the previous day).  

2) Foreign investors net sold Thai shares by THB1.31b. Institutional investors net bought by THB1.461b. There were net Long on SET50 Index Futures by 7,925 contracts.

 

Stock Picks & Trading Idea

SPRC (TP THB7.0): 2Q20 earnings are forecast to recover, thanks to improving gasoline crack spread after easing lockdown. Recently, US weekly gasoline dropped by -3.14m barrels, higher than market forecast at -1.1m bbls. This gives additional positive sentiment to the market.   

 

Investment Theme

Oil prices jump on US weekly crude oil stocks lower than expected: The overall US oil market figures last night came out better than the market estimates, led by 1) US weekly crude oil inventories decreased by -7.49 million barrels, better than the market forecast to drop by only -88k barrels. 2) US Gasoline Inventories decreased by more than -3.14 million barrels, more than the market estimate of -1.1 million barrels, reflecting high levels of driving in the United States. 3) US Distillate Inventory dropped by -450k barrels, vs forecast of +1.38 million barrels, indicating that economic activities are recovering better than the market estimates. 

This gave a positive effect on oil prices yesterday to rise + 2.3%. As for the JMMC meeting yesterday, the resolution of OPEC+  is to reduce production capacity in August to 7.7 million barrels per day, from 9.6 million barrels per day. This is in line with market expectations and with the previous OPEC+ resolutions. Today, we suggest following the ECB meeting with expected interest rates to remain low but keep an eye on additional stimulus measures.

 

Investment Strategy: Today, the SET is expected to rebound in a range of the support at 1,340 and resistance at 1,365 points. Focus on stocks with positive catalysts. Today’s ATO top pick stocks are “SPRC, DTAC,JMART”.

 

Big Issue

US industrial production surges 5.4% in June from +1.4%, vs expected +4.3%.

US weekly crude oil inventories declined to -7.49m bbls, better than the market forecast to drop -88k bbls.

 

Eyes on

16 July: ECB meeting, China’s 2Q20 GDP, US retail sales (June), US weekly jobless claims

17 July: US Consumer Confidence Index (July), Eurozone CPI (June)

SET-listed companies’ 2Q20 earnings results preview and report

 

Technical View

SET      Support : 1345/1330      Resistance : 1360/1370