Daily Strategy for Investors on April 8, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on April 8, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

1) Dow Jones and Commodity yesterday – The Dow stock market fell by 26.13 points  (-0.12%), WTI crude oil prices fell by USD2.45 (-9.4%) and gold price increased by USD48.2 (+2.93%).

 

Investment overview today – in the short-term, it must be cautious about profit-taking after Thai stock market rose by more than 76 points (+6.7%) yesterday (7 April), with negative external factors coming from weak economic overview and the price of crude oil in the world market decreased while positive factors in the country are still supported by the SSF fund trading and government stimulus measures. AWS recommend investing in Theme Investment, related to economic stimulus measures and the acceleration of disbursement of the government budget for the year 2020.

 

2) Crude oil prices fell sharply which will pressure on stocks in the energy sector today, The EIA’s Short-Term Energy Outlook report, yesterday (7 April), speculated that the price of Brent crude oil in 2020 at USD33 per barrel and 2021 at USD46 per barrel decreased by USD10 from the previous estimates (Feb 2020) for both 2020 and 2021, including the forecast that demand for crude oil in 2020 will be 94.4 million barrels per day, down by 5.6% from the original estimate and down by 6.2%YoY.  

3) Crude oil market: There are still issues worth following which are (1) US weekly crude oil reserves report today (8 April at 9.30 p.m. Thai time). Analysts estimated that it will increase 8.4 million barrels in the past week (ending 3 April) and (2) The OPEC and the National Alliance meeting (8-9 Apr), the market is expected to see cooperation in the reduction of production capacity of key producer countries (Saudi Arabia and Russia). Also, AWS estimated that if the meeting results in a reduction in production capacity in the range of 6 – 10 million barrels. This will only support crude oil prices which will cause crude oil prices to move within the range of USD25-30 per barrel (Crude oil price assumption of USD32.3 per barrel)

4) Government stimulus measures to reduce the impact of COVID-19, so AWS recommends investment in theme investment. The economic stimulation measures and government budget disbursement in year 2020 – the Cabinet approving the third phase of economic recovery measures in the amount of Bt1.9tn (about 10% of GDP)  

5) Economic Data this week still has to follow: on 9 Apr (1) The number of unemployment benefits for the first time is expected to increase by 5 million people last week, while the previous week was 6.65 million people. (2) The US Producer Price Index (PPI) in March is expected -0.3% from February 2020 at -0.6%. (3) Minutes of the Federal Reserve’s Monetary Policy Committee (FOMC) and (4) Minutes of the European Central Bank monetary policy meeting / Friday (10 Apr); The US core CPI report for March 2020 is expected to be 0.1%MoM.

 

Today, AWS expected the SET to be with the range 1,186-1,250 (Support at 1,203 1,186 and 1,156 // Resistance at 1,232 1,250 and 1,280) which the recommended stocks are BGC, THG, BEC, TPIPP, and RS (Follow in the Technical Express analysis).

 

Theme Investment: 

1) Slightly affected stocks from COVID-19, AWS chooses TU, GFPT, CPF, TFG, BJC, CPALL, and TQM. 

2) Down side limiting and strong cash flow, AWS chooses BGRIM, EGCO, GULF, GPSC, and RATCH.

3) Stocks which obtained the benefit from work from home measure, AWS chooses ADVANC, INTUCH, DTAC, TRUE, DIF, and COM7.

4) Stocks for long term investment (DCA), AWS chooses ADVANC, AOT, BDMS, and DIF. 

5) Economic stimulus measures and the accelerated disbursement of the government budget for the year 2020, AWS chooses CK, SEAFCO, WHA, KKP, AOT, CPALL, BEM, and HMPRO.

6) Defensive and high dividend, AWS chooses KKP (Div.Yld. 15.9%) QH (Div.Yld. 9.3%) DIF*(Div.Yld 8.2%) TISCO (Div.Yld. 8.7%) INTUCH*(Div.Yld. 6.2%) TTW*(Div.Yld. 4.8%) and RATCH*(Div.Yld. 4.2%) *IAA Consensus.