Daily Strategy for Investors on June 10, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on June 10, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

The SET index still has risks and being pressured by high market valuation in response to the positive factors from the increased confidence in the overall economy earlier, including the VIX index returned to recover in the past 3 days. So, AWS believes that the market is likely to fluctuate in the downtrend to adjust to the short-term base. Technical factors look at support at 1,372 points, while fundamentals that are still pressuring the overall investment are from (1) Concerns over the overall 2Q20 earnings (announced gradually in July) and (2) Volatile crude oil prices.

 

Crude oil prices are still volatile – Although the latest crude oil prices are closing back to recover slightly, it was still fluctuating after continuously increasing by more than 40% from the end of 1Q20. AWS has a short-term negative view on crude oil prices and believes that the recovery is only speculation from the expectation that demand will return to rise after many countries have started to open the economy. However, distillation rate for refineries around the world, including the U.S. in May, are still below the 5-year average. Therefore, there are still no real positive fundamentals signals to support the recovery.

 

Following the Fed Chairman’s statement tonight, AWS still believes that it will maintain interest rates and QE policies – The market expects the Fed will maintain interest rates at 0% -0.25%, but the interesting issue is the Fed’s view on economic trends, including future interest directions. Previously, the Fed used financial instruments by announcing the purchase of bonds according to quantitative easing (QE) without limiting credit and time to maintain liquidity in the market in addition to the fiscal tools. The government chooses to inject a total of USD2tn (10% of U.S. GDP).

 

NBER forecasts that the U.S. economy will clearly recover since 3Q20 – The U.S. National Bureau of Economic Research (NBER) states that the U.S. economy has entered a recession since February as a result of the COVID-19 and is considered a record deeply recession which caused the U.S. economy ending the longest period in the U.S. history. However, NBER believes that the U.S. economy will return to expand in 3Q20 onwards, which in line with the confidence index of small businesses rose 4.5 points to 94.4 in May, better-than-expected rise. However, the survey of Job Openings and Labor Turnover rate of workers (JOLTS) of the U.S. statistics office found that the number of job openings (Demand Indicators in the labor market) decreased 965,000 positions to 5.0 million in April (the lowest since December 2014).  

 

The interesting of the U.S. economic data in this week – Consumer Price Index (CPI) in May, Number of weekly jobless claims, Producer Price Index (PPI) in May, Import and export prices in May, and initial consumer confidence in June from the University of Michigan.

 

Technical View – Today, AWS expects the SET index to move in a range of 1,372 – 1,419 points (with support at 1,391, 1,372 and 1,343 points and resistance levels at 1,419, 1,437 and 1,466 points). The recommended stocks are ERW, MBK, GFPT, RS and MAJOR.

 

Theme Investment

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

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

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

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

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