Daily Strategy for Investors on March 16, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on March 16, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

1) The Dow stock market rose by 1,985.00 points (+ 9.36%). WTI crude oil prices rose by 23 cents (+0.7%) and gold price fell by USD73.6 (-4.63%).

2) The pandemic of COVID-19 is still severe. Recently, Italy and Spain have announced the Lockdown, including the Middle East countries such as Saudi Arabia, while the US announced a state of emergency to reduce the impact of the pandemic of COVID-19, which was the first time in 60 years.

3) AWS believes that the second emergency interest rate cut in 2 weeks has caused the market to be more worried about COVID-19 situation. The Federal Reserve has resolved the policy interest rate cut 1%, resulting in the policy rate at  0% – 0.25% which was the second emergency short-term interest rate cut in 2 weeks before the regular agenda meeting on 17-18 March (latest meeting has been canceled).

4) For Futures and Commodities market movements this morning, the Dow Future reacted negatively as soon as the Fed cut interest rates. The gold price increased, while US government bond yields for 2 years, 10 years and 30 years have decreased, as well as falling crude oil prices.

5) The crude oil prices this week fluctuated due to the latest issues that the US announced the closure of flights between the US with the UK and Ireland. This not only affecting jet fuel, but also affecting the overall oil consumption from disruption of trade and tourism activities despite there being positive factors from the US that will announce the import of oil to store as a Strategic Petroleum Reserve (SPR). At present, the IEA report states that the SPR will still have another 75-80 million barrels of reserves.  

6) SET announced to change in the criteria for making short sell from “Can only sell short at a price not lower than the final price” to “Can only sell short than the last price” starting on 13 March. Last week, SET had Circuit Breaker for 2 consecutive days (12 and 13 March). The stocks with the shortest sell were AOT, GULF, PTT, ADVANC, KBANK, GPSC, CPALL, SCB, PTTGC and PTTEP so we believe that in the short-term there is a chance that the share price in this group will recover.

 

Today’s analysis – Company Update: TU and SEAFCO

TU – Positive factors boosting investment from the pandemic of COVID-19, which has caused people to start stockpiling food so it enhances TU revenue due to orders from customers in the US, Europe and Asia. AWS believes that the current situation does not affect the food business due to the food business is still necessary and TU also benefits from the weak baht as the company has 41% revenue from America and 28% in Europe, including tuna prices recovering. To sum up, AWS changes the recommendation from “Hold” to “Buy” with the target price of Bt18.40.   

 

AWS forecasts the SET for this week (16-20 Mar) to be in the range of 966 – 1,296 points and today expect the SET to be within the range of 1,088 – 1,205 points (with support at 1,088 1,011 and 893 points and resistance levels at 1,205 1,282 and 1,400 points).

 

Theme Investment:

1) Accelerate the disbursement of government budget in 2020. AWS chooses CK (TP Bt22.00), SEAFCO (TP Bt7.30), WHA (TP Bt4.40), and KKP (TP Bt80.00). 

2) Government stimulus measure, AWS favours AOT (TP Bt79.00), CPALL (TP Bt85.00), BEM (TP Bt12.50) and HMPRO (TP Bt19.00). 

3) Global trade has eased, AWS chooses CPF (TP Bt33.00). 

4) Interest rates cut. AWS chooses ORI (TP Bt9.00), SPALI (TP Bt20.00), MTC (TP Bt73.00), KKP (TP Bt80.00), and TISCO (TP Bt112.00).

5) High Dividend, AWS chooses KKP (Div.Yld.8.9%), QH (Div.Yld. 7.5%) TISCO (Div.Yld. 6.1%) BAFS (Div.Yld. 4.1%) and RATCH (Div.Yld. 4.1%)