Daily Strategy for Investors on June 11, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on June 11, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

Investment Overview Today – The SET Index is still facing the risk of valuation. AWS believes that the market has a chance to fluctuate and moves in a downtrend, although Foreign Fund Inflow from the appreciation of Thai Baht will be a factor that helps reduce some of the effects. AWS estimates that the effects of the economic stimulus measures, especially the tourism sector, and the relaxation of the lockdown measures in the fourth phase will not much affect investment sentiment since in the past the share price has continuously increased due to the gradual opening of the economy from May to early June.

 

Gathering stocks that benefit from Phase 4 relaxation lockdown – Ad hoc committees consider businesses or activities to relax the operation in phase 4 are scheduled to draft proposals for the CCSA consideration on 12 June, as well as discussing the preparation for the trial of cancellation the 15-day curfew which expected to open 15 June. It is expected to have a relaxation for (1) the use of school buildings or educational institutions, aside from the semester of the school under the Ministry of Education on 1 July, (2) economic activities and lifestyle activities, and (3) physical activity, healthcare, and recreation. For the beneficial shares, but still were Laggard, AWS chooses VGI, PLANB, IMPACT, and SISB.

 

The FOMC has a resolution as expected. There is no Positive Surprise – The Fed’s FOMC has resolved to maintain the short-term interest rates at 0.0% -0.25% with the signal to maintain interest rates until 2022 or until the economy returns from the COVID-19 impact. There is no possibility of a negative interest rate. In addition, the Fed president insists on buying bonds according to the quantitative easing (QE) without credit limit and time limit to maintain market liquidity as before. These factors cause the Dollar Index (the USD compared to the 6 major currencies in the basket) dropped by 4.1% over the past month.

 

The Fed expects that the U.S. economy to become negative by 6.5% in 2020 – The Fed expects that the U.S. economy to become negative by 6.5% in 2020 before recovering in 2021 at 5%, and the unemployment rate to be at 9.3% in 2020 before dropping gradually to 6.5% and 5.5% in the year 2021 and 2022, respectively.

 

Crude oil prices fluctuated – Crude oil prices are still volatile which previously, crude oil prices had a positive fundamentals from the rising demand, as reflected in the previous increase in crude oil prices. However, the assumptions that AWS uses to assess the risk are from (1) real demand has not been increased after the refining rate remained stable at a low level and (2) oil production capacity in the U.S. which increased according to the crude oil price as reflected from the U.S. Energy Information Administration (EIA) report, crude oil reserves increased by 5.7 million barrels last week. (Ending 5 June) which contrary to analysts expected to decrease 3.2 million barrels, including the higher oil reserves which were more than they expected. Therefore, the positive factor that continues to support crude oil prices is only the weak Dollar Index, which has a positive effect on speculation in the commodity market.

 

Technical View – Today, AWS expects the SET index to move in a range of 1,407 – 1,435 points (with support at 1,415, 1,407 and 1,394 points and resistance levels at 1,427, 1,435 and 1,448 points). The recommended stocks are BBL, SPALI, STEC, AWC and TISCO .

 

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