Daily Strategy for Investors on June 5, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on June 5, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

Investment Overview Today – AWS expects the SET to be a sideways and may have a short-term rest after increasing by 5.1% in June. However, the effect of Foreign Fund Inflow in the Thai and regional stock markets is still a limited downside factor for the market. AWS still believes that in the market today, there is still a chance to close above 1,400 points since in 3 working days in June, foreigners had a net buy position of nearly Bt6.0bn. However, all risks remain such as the valuation of the market and foreign risk from politics and trade disputes between the U.S. and China, including stocks that have increased from a positive sentiment from the easing lockdown measure, while the short term fundamentals are still weak like tourism-related businesses, both airlines and hotels.  

 

The U.S. economic numbers signaled a clear recovery – The U.S. Department of Labor reported the number of initial jobless claims of 1.88 million people in the past week, lower than 2 million for the first time since mid-March. This sends a positive signal that the impact of COVID-19 on the U.S. labor market has been passing the lowest point.

 

The ECB increases credit limit and extends QE period for PEPP project – The European Central Bank (ECB) has resolved to maintain policy interest rate (refinance interest rate) at 0%, and increase the credit limit for buying bonds in the PEPP (Pandemic Emergency Purchase Program) by EUR600bn (formerly EUR750bn) to EUR1.35tn and extend the purchase time bonds from the end of 2020 to June 2021 to stimulate the economy in the region that affected by  COVID-19. AWS has a positive view on investment sentiments, as increasing the credit limit and extending the QE period is beyond the market’s expectation.  

 

Crude oil prices fluctuate. OPEC meeting is still uncertain – The crude oil market is still waiting for clarity from the OPEC+ meeting, especially the extension of crude oil production cuts by another 3 – 6 months from the end of June. Yesterday (4 June), there was no OPEC meeting which was postponed from 9-10 June. However, it is unclear when the meeting will be held between 9-10 June as scheduled or postponed to 17-18 June according to the news.

 

Interesting issues next week – Tourism stimulus measures (recently, it was back for review and expected to submit the new proposals next week), the U.S. Federal Reserve meeting (Fed), and the situation between the U.S. and China, both international politics (in Hong Kong) and international trade.

 

Technical View – Today, AWS expects the SET index to move in a range of 1,399 – 1,426 points (with support at 1,406, 1,399 and 1,386 points and resistance levels at 1,418 1,426 and 1,438 points). The recommended stocks are BCP, CK, ORI, TRUE, and KCE.

 

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