Daily Strategy for Investors on February 12, 2020

Maybank Kim Eng (Maybank) released an analysis for the trading session on February 12, 2020, indicating the essential events in the stock market as follows:

 

Market Summary

The SET yesterday moved downward driven by selling pressure on big caps of energy, banking and ICT sectors. However, buying pressure continued on finance stocks. The SET index closed at 1,523.93 (-11 points) with a trading value of THB52b (THB60b the previous day).  

Foreign investors net bought Thai shares by THB548m. Institutional investors net sold by THB1b. There were net Short on SET50 Index Futures by 628 contracts.

 

Stock Picks & Trading Idea

EA (TP THB57.75): Maybank expects 4Q19 earnings to remain healthy, with a jump of +126% YoY, fuelled by electricity production capacity generated by all projects and the selling price of B100 biodiesel tends increase after the B20 measure implemented in the end of 2019. Maybank plans to consolidate the EV cars and electric boats projects into our estimates once the delivery plan is confirmed this year. Maybank maintains “TRADING BUY” rating, TP of THB57.75, based on PEG 1.0x.

 

Investment Theme

FED chair said U.S. economy is in a “very good place,” shrugged off concerns over a recession and the impact of the coronavirus: Federal Reserve Chairman Jerome Powell said Tuesday that the U.S. economy appears durable, with steady growth and unemployment near a half-century low, but faces risks from the broadening viral outbreak that began in China. Powell also said that the Fed is content with where interest rates are, suggesting that no further rate cuts would be contemplated unless economic conditions were to change significantly. Since last fall, the Fed has kept its benchmark short-term rate in a low range of 1.5% to 1.75%, well below levels typical during previous economic expansions. The Fed is monitoring developments stemming from the coronavirus, Powell said, which he cautioned “could lead to disruptions in China that spill over to the rest of the global economy.” In response to questions, Powell said it was too early to assess the scope of the threat the virus poses to the U.S. economy.  Recently, deaths in mainland China rise to 1,113 (9.3% DoD) as confirmed cases reach more than 44,838, 4% DoD. In summary, the above mentioned trend reflects better control of spread. We believe that the issue is starting to pass the most severe and will gradually ease in the next period. However, the said situation is considered to affect the global economy in the first quarter of the year. Therefore, keep a close watch on the market to reduce the earnings forecast of the related listed companies.

 

Today’s SET’s support level is estimated at 1515 and resistance at 1540. Maybank recommends accumulate stocks with strong earnings forecast (EA, SAWAD, BDMS, RBF) and those  offer high dividend (TISCO, TCAP, AP).   

 

Big Issue

Last night: Investor confidence at 4-year low. Investor Confidence Index (ICI) tumbled by 9.9% to 72.75 from January’s 80.75, according to the monthly survey by the Federation of Thai Capital Market Organisations (Fetco).

 

Eyes on

12 Feb: EU MPI

13 Feb: US CPI (Jan)

13 Feb: MSCI listing and delisting Voting of Budget act for 2020 fiscal

14 Feb: EU trade balance (Dec), EU 4Q19 GDP, US retail sales, US Consumer Confidence, US MPI

4Q19 earnings results announce

16 Feb: 5G auction bidding

 

Technical View

Maybank has set a support level at 1500/1515 and a resistance level at 1530/1540.