Daily Strategy for Investors on April 20, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on April 20, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

Investment overview – 4 factors supporting the stock market this week are from (1) Down-side of the limited crude oil prices (2) Loan Act of Bt1.9tn announced in the Government Gazette faster than market expectations, and (3) concerns about the global economic statistics declining, and (4) the COVID-19 situation that has eased both domestic and abroad, causing the expectation to ease the lock down measures, especially Thailand that will be considered within this week.

 

1) AWS believes that the down-side of crude oil prices will begin to narrow, but it still has a chance to fluctuate. It is expected that 1-2 months from now, crude oil prices will begin to recover in a side-way up manner. Data from the International Energy Agency (IEA) stated that  COVID-19 has reduced the oil demand by 29 million barrels per day. The lower crude oil price reflects the resolution of the OPEC+ meeting and the G20 in reducing production that is not enough. However, AWS believes that reduction in production in early May, including the possibility of easing global lock down measures will help support the price of oil to recover gradually, including the possibility that the producing countries will reduce their production capacity more than the agreement due to the necessity that the demand has decreased dramatically, coupled with the oil reserve depletion that started to full capacity, while the OPEC group will hold a meeting again in early June 2020.  

2) Relaxation of global lockdown measures will be another factor to support investment – the number of new infected people per day around the world is likely to be stable to down, including Thailand’s statistics, the average daily number of new infections last week  (12 – 18 April) was 31 people, which was down from the previous week at 64 people, while the US leader announced that each state is able to decide to open the city by doing 3 phases as recommended by the government. It is expected that many states will begin to open from 1 May with a new injection of another USD250bn which is prepared to approve through the council by the end of April.

3) If there is a relaxation of lockdown measures in Thailand, AWS is optimistic about ADVANC, BTS, BEM, CPN, PLANB, and HMPRO. The Centre for COVID-19 Situation Administration (CCSA) prepares proposals for easing lock-down measures to the Prime Minister  (the chairman of CCSA) to consider within this week.  

4) Reduced concerns over disbursement of COVID-19 victims after the Bt1.9tn Loan Act was announced through the government gazette yesterday (effective on 19 April), resulting in decrease in concerns about the investment overview after the market is expected to take at least 2-4 weeks, it will be positive for banking and financial sectors. AWS chooses KBANK, SCB, KTB, BBL, KTC and SAWAD.

5) Key economic numbers this week, follow important European economic statistics (1) Number of first jobless claims in England (22 April). Market is expected at 175,000 people, up from 17,300 people last week. (2) Consumer Price Index (Core British CPI in March  (22 April), the market is expected at 0.2%MoM and 1.6%YoY and (3) German manufacturing PMI (23 April). The market expected at 39.0 points, down from March at 31.7 points. For the US, it still has to track the weekly number of first jobless claims people and the Purchasing Managers’ Index (PMI) for the manufacturing sector in April. The market is expected at 37.0 points, down from 48.5 in March, which will be reported on 23 April.

 

Technical view – AWS estimates the SET framework this week (20 – 24 April) at 1,204 – 1,271 points. AWS expects the SET Index today in the frame of 1,226 – 1,253 points (with support at 1,233, 1,226 and 1,212 points and resistance at 1,246, 1,253 and 1,267 points. The recommended stocks today are EPG, DTAC, CPN, HMPRO and AOT (follow in Technical Analysis).

 

Theme Investment: 

1) Easing lock-down measures. AWS chooses ADVANC, BTS, BEM, CRC, CPN, PLANB, and HMPRO. 

2) Loan Act of Bt1.9tn. AWS chooses KBANK, SCB, KTB, BBL, KTC, and SAWAD. 

3) Stocks that are slightly affected by COVID-19, AWS chooses CPF, CPALL, BJC, BAM, ADVANC, and TRUE. 

4) Limited down-side, the company has strong cash flow. AWS chooses BGRIM, EGCO, GULF, GPSC, and RATCH. 

5) Long-term cumulative shares (DCA), AWS selects ADVANC, AOT, BDMS, BEM, and DIF.

6) SSFx target stocks, AWS selects PTT, PTTEP, BJC, CPALL, AOT, GULF, EGCO, INTUCH, ADVANC, BAM, and BDMS.