Asia Stocks Mixed amid a Drop in Oil Prices and a Rise in U.S. Bond Yield

Stocks in Asia traded in a mix session on Thursday, May 20, 2021, as Japan reported surging exports data in April.

 

As of 9:32 local time in Thailand, Nikkei rose 0.01%, SSEC fell 0.43%, HSI decreased 0.75%, ASX 200 gained 0.98% and Kospi dropped 0.39%.

 

Japan’s exports rose 38% in April compared to the same period last year, which was higher than an estimate of 30.9% increased by Reuters poll.

 

Asia Wealth Securities (AWS) expected the SET index to remain volatile in the range of 1,550-1,575 points after declining crude oil prices, U.S. bond yield raised, concerns about inflation that comes back to pressure the overall investment and the COVID-19 situation. Despite the limited downside factors, the overall picture of Thai economy after the Office of the National Economic and Social Development Council (NESDB) and the Monetary Policy Committee (MPC) lowered the GDP forecast for 2021, including the government preparing to issue the Bt700bn to fix the problem of COVID-19 and stimulate the economy in the short-term. This will make domestic play stocks attractive. AWS continued to focus on its recommended Core Investment, with a portfolio of 50%.

 

The WTI crude for June delivery fell USD2.13 (-3.3%), crude oil price has negative factors from (1) Iran will return to export crude oil again after negotiations between the U.S. and Iran on the lifting of sanctions on Iran, progress has been made (2) The U.S. dollar appreciated. The dollar index lasted at 90.17 points. (3) The 10-year U.S. Treasury yield recovered 1.673% this morning. (4) Lower crude oil demand from the COVID-19 situation, especially in India, which is still highly prevalent spread, making use of refined oil in India during 6M21 down 20%YoY after the lockdown measure, including in Japan, Taiwan and Singapore, and (5) Rising U.S. crude oil reserves, most recently the U.S. Energy Information Administration (EIA) reported a 1.3 million barrel increase in U.S. crude oil reserves last week (ending 14 May) in contrast to the Market Consensus that was expected to decline 2.9 million barrels as a result of a 587,000 barrel drop in imports, while the refining rate rose only 0.2%. It also reported a decrease in petroleum reserves. Gasoline reserves were down 1.96 million barrels (886,000 barrels were expected to decrease) and diesel reserves were down 2.23 million barrels (386,000 barrels were expected to decrease).

In addition, the EIA reported crude oil reserve at Kuching, Oklahoma was down 142,000 barrels compared to the previous week with a decrease of 421,000 barrels.

 

Core Investment

1) For foreigners to hold a property in the country (Short-term trading 2 weeks) – NOBLE, ORI and SC

2) Stocks which benefit from the COVID-19 situation (Short-term trading 2 weeks) – BCH, BDMS, COM7, III, STA and STGT

3) Global Play (Trading within 1-2 weeks) – PTTGC PTTEP TOP SPRC CPF KCE HANA and SAT

4) Stocks which obtained benefit from EV CAR Thailand 2035 (Short-term trading 1-2 months) – BPP, GPSC, BCPG, EA, NEX, CHO and KCE

5) Dividend Play (Middle-term trading 6-12 months) – SC, LH, QH, KKP, TISCO, RATCH, DIF, INTUCH, EASTW and TTW

6) Long term accumulative stocks (DCA) (Long-term trading over 1 year) – AOT, BEM, ADVANC, WHA, LH, CPALL, CPF, BDMS, HMPRO, BBL and KTB