Daily Strategy for Investors on May 29, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on May 29, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

Today’s Investment Overview – Limited valuation is a factor that might pressure the SET after rising to test 1,350 points, as a short-term take profit point in the technical analysis. Yesterday, the SET closed at 1,337.51 points, down  7.6 points (-0.57%), rising to a high of 1,358.6 points before selling at the end of the investment. The SET has increased by more than 31% from the lowest point in mid-March 2020. The SET resumes to face negative factors from  (1) political and international trade dispute, (2) the weak US economic data in 2Q20, (3) limited valuation of the SET, (4) the direction of short-term fluctuations in crude oil prices, and (5) Sell on fact stocks that had positive factors in the past, especially stocks in the sector that benefit from the easing lockdown measures in phase 3.

 

International political problems begin to limit investment upside – The U.S. leader prepares to announce a new policy to deal with China after being dissatisfied that China has enforced the security laws in Hong Kong. In the meeting of the Chinese NPC, they have approved to enforce a new national security law in Hong Kong, which gives the power to the parliament of China to bill the legal framework and enforce legal mechanisms to prevent and punish any acts that are detrimental to national security.  

 

The 2nd draft of 2Q20 U.S. GDP becomes negative, while the number of initial jobless claims increased at a reduced rate – (1) The U.S. Department of Commerce revealed the 2nd estimate of GDP in 2Q20 at -5%, up from the first estimate of -4.8%. Negative factors are from the results of the government’s lockdown measures, making disruptions in economic activities due to controls of the spread of  the COVID-19 and (2) the U.S. Department of Labor reported the number of initial jobless claims of 2.1 million in the past week. Since the COVID-19 pandemic, 40 million Americans have lost their jobs since 21 March 2020.

 

Crude oil prices are still fluctuating before the OPEC+ meeting on 9 June – Currently, Dubai crude oil price was USD31.6 per barrel, rising more than 83% in closing prices at the end of April. However, the direction of oil prices remained volatile. AWS believes that the amount of refined oil reserves, especially the reduced benzene, will support short-term demand for crude oil. Although the EIA reported a reserve of more than  8 million barrels of crude oil, the uncertainty in reducing the Russian production capacity before the meeting of the OPEC+ group on 9 June is a factor that caused the crude oil price to fluctuate.  

 

Technical View – AWS expects the SET index to move today in a range of 1,331 – 1,344 points (with support at 1,331, 1,324 and 1,310 points and resistance levels at 1,344 1,351 and 1,365 points). The recommended stocks are BCPG, TU, BCP, SUPER, and TCAP.

 

Theme Investment

1)Recovery of crude oil price – PTTEP, PTT, TOP, BCP, SPRC, and PTTGC

2)Accelerate the disbursement of government investment budget- CK, STEC, SEAFCO, PYLON and TASCO

3)Stocks that benefit from entering rainy season – BCPG, BGRIM, CKP, GPSC, and EASTW

4)Stocks that benefit from government measure – ADVANC, BTS, BEM, CPF, CPALL, BJC, CRC, CPN, PLANB, HMPRO, OSP, and CBG

5)Long-term cumulative shares (DCA) – ADVANC, AOT, BDMS, BEM, CPALL, DIF and HMPRO

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

 

Foreign Market: (InfoQuest)

U.S. stock market:The Dow Jones Industrial Average closed at 25,400.64 points, down 147.63 points (-0.58%). S&P500 index closed at 3,029.73 points, down 6.40 points (-0.21%) and Nasdaq closed at 9,368.99 points, down 43.37 points (-0.46%). The U.S. stock market s fluctuated in a narrow frame by opening the market in the positive territory from the hope that the global economy will recover after the governments of various countries began to relax the lockdown measures to allow the business sector to resume operations, but there is selling pressure at the end of the trading period after U.S. leader revealed to reporters that he will announce U.S. new policy to proceed with China after the meeting of the National People’s Congress (NPC) approved the enforcement of a new national security law in Hong Kong.

 

European stock markets:The Stoxx Europe 600 closed at 355.47 points, up 1.64%. European stock markets rose to the highest level in 11 weeks due to increased confidence in the economic recovery and reopening the business after easing the lockdown measures in various countries, including the establishment of Eurozone economic stimulus fund affected by the COVID-19 pandemic. Previously, the European Union (EU) has revealed a European stimulus package worth EUR750bn (USD826bn) and the European Central Bank (ECB) expects to expand the bond-buying program with a budget of around EUR500bn next week, including positive factors from pharmaceutical manufacturers to accelerate the development of COVID-19 antiviral vaccine.