Daily Strategy for Investors on March 23, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on March 23, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

1) Dow Jones feII by 613.21 points (-4.6%), whiIe WTI crude oiI price dropped by USD2.69 (-10.7%), but goId price rose by USD5.3 (+0.36%).

2) SET today (23 March) is likely to be lower due to the COVID-19 pandemic, a sharp drop in crude oiI price and the interest rate cut by the BOT, which affects energy and banking sectors.

AWS recommends focusing on investing in groups that benefit from the situation of COVID-19 (stock antivirus …. COVID-19), especially the measures of Bangkok to close the risk areas for 22 days (22 March – 12 April). The measure makes the shares in the said Theme interesting including stocks in the high dividend group according to AWS theme investment.

3) The situation of COVID-19; IastIy, the number of infections have aIso increased with an increasing rate. Therefore, the investment overview stiII has risks from using advanced measures to reduce the spread of COVID-19.

4) Pressure factors for investment overview this week still have to follow the US 4Q19 GDP report, which is lower than expected at 2.1%QoQ, including the disclosure of the number of US unemployment benefits this week which expected to increase significantly.

5) Crude oiI prices have been under pressure from the attitude of Saudi Arabia which continues to increase production, set a target of 12.3 million barreIs per day (a high record) beginning in April 2020, with the latest situation is very unlikely in return for negotiations to reduce production capacity. From this point, it wiII affect the share price in the energy sector today.

6) The MPC convened a special meeting and a unanimous resolution for reducing interest from 1% to 0.75% (a record Iow) effective on 23 March. The MPC estimates that COVID-19 situation may be worse than expected which wiII greatly affect Thai financial market and the overall economy.

7) Yesterday (22 March), the government led the team by the Bank of Thailand, the Ministry of Finance and the SEC announced measures to support the COVID-19 situation. AWS is optimistic about the bond market, but the stock market has not much advantage.

       

Today’s analysis

Banking Sector – The MPC announced an emergency rate cut by 0.25% to 0.75% which is surprising but still within the expected framework. From this point, AWS estimates that it wiII affect to the banking sector’s earnings around 6.4%, SCB being the most affected (-9.0%), BBL (-8.7%), while the banking groups that operate leasing businesses wiII obtain the benefit, AWS expects KKP to benefit the most (+5.2 %). AWS weighted on short-term neutraI investment and the share price is likely to decline which responds to interest rate cuts, but the frame of interest rate cuts began to limit and if the situation with COVID-19 resolves. AWS is looking at a good timing for investing in the long-term and choose Top Picks which are BBL (Buy; TP Bt167.00) and KKP (Buy; TP Bt81.00)

AWS forecasts the SET for this week (23-27 Mar) to be in the range of 1,048 – 1,213 points and today expect the SET to be within the range of 1,111 – 1,173 points (with -support at 1,111 1,087 and 1,047 points and resistance levels at 1,150 1,173 and 1,214 points).

 

Theme Investment:

1) Antiviral stocks COVID-19, AWS chooses TU (TP Bt18.40) GFPT (TP Bt12.00) CPF (TP Bt33.00) TFG*(TP Bt5.35) BJC*(TP Bt48.00) CPALL -(TP Bt85.00) and TQM*(TP Bt69.00). 2) Accelerate the disbursement of the government budget in 2020. AWS chooses CK (TP Bt22.00), SEAFCO (TP Bt7.30), WHA (TP Bt4.20), and KKP (TP Bt80.00). 

3) Government stimulus measures, AWS chooses AOT (TP Bt79.00) CPALL (TP Bt85.00) BEM (TP Bt12.50) and HMPRO (TP Bt19.00). 

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.YId.11.3%), QH (Div.YId. 8.7%), DIF (Div.YId 8.2%), TISCO (Div.YId. 7.9%), BAFS (Div.YId. 5.6%), RATCH (Div.YId. 5.5%) and ADVANC (Div.YId. 4.8%) *IAA Consensus