Daily Strategy for Investors on February 17, 2020

Maybank Kim Eng (Maybank) released an analysis for the trading session on February 17, 2020, indicating the essential events in the stock market as follows:

 

Market Summary

1) The SET on Friday weakened, especially in the afternoon session, driven by profit taking pressure on BAM and power plant stocks. The SET index closed at 1,526.3 (-6.47 points) with a trading value of THB62b (THB46b the previous day).  

2) Foreign investors net sold Thai shares by THB1.578b. Institutional investors net bought by THB304m. There were net Short on SET50 Index Futures by 8,156 contracts.

 

Stock Picks & Trading Idea

SCC (TP THB400): i) Petrochemical spreads in Feb 2020 began to recover after it bottomed in Dec 2019 due to production cut. ii) Value Added Products & Services : HVA and investment expansion should help operating results to outperform the industry. iii) SCGP spin-off should help unlock valuation.

 

Investment Theme

Investment Strategy: Today’s SET’s support level is estimated at 1520 and resistance at 1540. Maybank recommends accumulating (SCC , SAWAD , CBG , RBF ) and trading buy (ADVANC , TU).

Tactically, Maybank finds that when the market weakens it presents a buy opportunity, due to 1) The coronavirus outbreak situation began to improve better as the daily numbers of infected cases decline and we expect it should end by June. 

2) Weak economic data which will be followed by the fiscal policy to boost the economy. 

3) Dollar Index up +3% YoY on Eurozone’s stronger economic figures vs China.  

 

Top 2 things to watch today:

1) 5G auction results, positive to ICT:  The 5G auction result yesterday came out better than the market expected, especially the 2600MHz spectrum that ADVANC and TRUE won the bidding with not too high price. But this pressures DTAC in terms of competitiveness edges. Maybank expects the share prices should respond in the same direction.

2) This year GDP may be cut: Keep update on the 4Q19 GDP report today as the market forecast at 2.5%. Maybank believes it would be affected this year by the delay in Budget bill, the coronavirus outbreak and drought which is expected to become a risk factor. Thailand’s GDP for this year may be cut from the previous forecast of 2.5%. Recently, the Bank of Thailand forecast the GDP for a whole year at 1.5-2% and below 1% in 1Q20, as well as the private sector that estimate at lower than 2%.  

 

Big Issue

1) US Consumer Price Index (CPI) was +2.5% YoY in Jan, expected 2.4%

2) US retail sales for January was +0.3% MoM, inline.

 

Eyes on

17 Feb: 4Q19 GDP report

18 Feb: US Empire Manufacturing (Feb)

19 Feb: US new house construction (Jan), FOMC Minutes

20 Feb: China Loan Prime Rate (Feb)

Eurozone Consumer Confidence Index (Feb)

21 Feb: Court rule on dissolution of Future Forward Party, Thailand’s PMI Manufacturing and Services