Daily Strategy for Investors on June 26, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on June 26, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

Investment Overview Today – AWS expects that the SET Index today has a chance to recover in the form of a technical rebound from too much selling pressure during the market opening yesterday (25 June). Trading in the afternoon, AWS found stocks in the banking sector, power plant group, including refineries with fundamental upsides, such as BCP and SPRC. In AWS view, AWS believes that the price of WTI crude oil which recovered last night after the U.S. has no plans to use the lockdown measures again, causing today, energy stocks such as PTT and PTTEP will be interesting in which AWS gives weight only as speculation while the confidence in the stock market in the banking sector returned to increase confidence after the Fed announced the same measures as the BoT.

 

The U.S. economy has increased confidence in the short-term, but the labor market is still weak – The U.S. stock market recovered due to the short-term confidence increased after the Fed revealed the results of the Stress Test. Sensitivity analysis results were good. The Fed will conduct the Stress Test again during 4Q20. In addition, the White House Economic Advisor stated that the U.S. government will not lockdown the country again. However, the recovery of the labor market still has to wait. The latest information from the U.S. Department of Labor revealed the number of initial jobless claims last week is still up 1.48 million people, higher than expected and higher than 1 million per week which is the fourteenth consecutive week, although many states began to ease the lockdown measures and opened new economic activities.

 

Fed announced measures similar to BoT’s measure – The U.S. Federal Reserve issued a notification requesting domestic commercial banks not to pay more dividends than previously paid or return to buy back shares in 3Q20. The reason is similar to the BoT, announced last Friday. AWS still maintains the same view that such measures AWS likes and agrees with. The issuance of such measures is the main duty of the BoT Governor’s expression because the COVID-19 situation is still highly uncertain. The central bank needs to find measures to keep the economy system, financial system and commercial banks ready to cope with the increased risk and uncertainty. Although the said measure will affect stock price in the banking sector, AWS looks at it as a short-term only.  

 

The crude oil prices recover, but AWS looks that it will recover in the short-term – AWS estimates that the crude oil price will be around USD38 – 42 per barrel in the 1-2 month period from now. However, the short-term upside was limited from the demand for crude oil has not yet been fully returned. The current refining rate data is still below the 5-year average, as well as the recovery of crude oil prices higher than USD40 per barrel which will encourage Shale Oil producers in the U.S. to resume production so it will affect the crude oil market to face supply risks again.

 

Technical View – Today, AWS expects the SET Index to move in a range of 1,314 – 1,338 points (support at 1,320 1,314 and 1,301 points and resistance at 1,332 1,338 and 1,351 points). The recommended stocks are CBG, PTG, INTUCH, SPRC and TASCO.  

 

Theme Investment

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

2) Stocks that benefit from entering the 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