Daily Strategy for Investors on March 25, 2020

Maybank Kim Eng (Maybank) released an analysis for the trading session on March 24, 2020, indicating the essential events in the stock market as follows:

 

Market Summary

1) The SET yesterday gained on positive sentiment from economic stimulus measures both at home and abroad (FED) to ease impact from Covid-19. The SET index closed at 1,033.84 (+9.38 points) with a trading value of THB64b (THB59b the previous day).  

2) Foreign investors net sold Thai shares by THB1.943b. Institutional investors net bought by THB1.796b. There were net Long on SET50 Index Futures by 9,274 contracts.

 

Stock Picks & Trading Idea

BJC (TP THB53): SSSG of operators selling consumer products recovered in March from stockpiling due to mounting fears over Covid-19 outbreak. Maybank expect BigC’s SSSG should slightly recover from negative while BJC sees sales of consumer goods increases significantly such as tissue paper and soap.  

 

Investment Theme

1) Emergency Decree & additional stimulus measures: Thai PM announced Emergency Decree, comes into effect on March 26 (no details yet). Initially, Maybank have neutral view on this as it aims to reduce the spread of Covid-19 that is entering a fearsome stage. This is different from other situations in the past that aimed at fixing the political turmoil. 

So it should not look negative like it was in the past. Regarding the additional stimulus measures, the Cabinet has approved on Tuesday a package of stimulus measures worth at least THB117b to try and mitigate the impact of the coronavirus outbreak. Among the measures announced on Tuesday were: For people: THB5,000 handout a month for three months for some 3 million workers not covered by the Social Security Fund (SSF).

Those under the SSF will get increased unemployment compensation to 50% of salaries. THB10,000 emergency loan per person at 0.1% monthly interest (no collateral). THB50,000 special loan per person at 0.35% monthly interest (with collateral). State-owned pawnshops charge a lower rate of 0.125% a month. Personal income tax filing extended to August 2020. Health insurance premiums deduction increased to THB25,000 from THB15,000. Tax exemption on risk payments for medical workers. Training for income earners. 

For operators: Loans up to THB3m for SMEs at 3% interest rate in the first two years. Corporate income tax filing extended to August and September. Filing of other taxes for affected operators extended by three months. Filing of excise tax by service businesses extended by one month. Filing of excise tax for oil products operators extended to the 15th of the following month for three months. Exemption of import duty for products related to the prevention and treatment of Covid-19. Exemption of taxes and fee cuts for debt restructuring with non-financial institution creditors.

 

Investment Strategy: Maybank assess the support level of the SET index today at 1000 and resistance at 1080. For low risk takers and VI, Maybank recommends “buy on dips at around 1000+/- or lower”. For high risk takers, use only 20% of capital to trading buy on BJC, BAM and ADVANC.

 

Big Issue

1) Thai PM announced Emergency Decree, comes into effect on March 26

2) Dow soars over 11% in strongest one-day performance in 87 years

 

Eyes on

25 Mar: MPC meeting

25 Mar: MPC meeting, US durable goods orders (Feb)

26 Mar: BOE meeting, US GDP 4Q19

 

Technical View

SET    Support : 970/1000 / Resistance : 1040/1060