Daily Strategy for Investors on July 2

Maybank Kim Eng (Maybank) released an analysis for the trading session on July 2, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

1) The SET yesterday continued gaining in response to global crude oil prices rebound to positive terrain. The SET index closed at 1,349.44 (+10.41 points) with a trading value of THB53b (THB59b the previous day).  

2) Foreign investors net sold Thai shares by THB2.306b. Institutional investors net bought by THB2.232b. There were net Short on SET50 Index Futures by 1,958 contracts.

 

Stock Picks & Trading Idea:

PTTGC (TP THB57): Benefiting from global economic recovery, reflected by accelerating economic activities worldwide, combined with crude oil supply that OPEC+ manages to maintain at a balanced level, positive to global crude oil prices.  

 

Investment Theme:

Global manufacturing data recover: Yesterday, the US economic data reports came out better than the market expected, led by the ISM in June jumping to 52.6 points from 43.1 points, better than the market expected at 49.8 points. This reflects the US various production started to recover in accordance with the weekly crude oil inventories numbers which decreased by more than 7.2 million barrels, while the market forecast to increase by 290k barrels. Meanwhile, distillate inventory also reduced by 593k barrels as the market expected to increase by 36k barrels.

The refinery utilisation rose to 0.9%, better than expected by 0.35%. In addition, the market also received additional positive psychology sentiment. According to a report by Pfizer Inc, the largest US pharmaceutical company, revealed that the trial of the vaccine against the Covid-19 in humans found satisfactory results. This indicates that the vaccine will have a continuous positive development. Maybank believes this issue should become a positive boost to risky asset investment in the midst of COVID-19 epidemic in the US is still at concern level in the near term.

 

Investment Strategy: Today, the SET is expected to move upwards in a range of the support at 1,330 and resistance at 1,365 points. Focus on stocks benefiting from global economic recovery. Today’s ATO top pick stocks are “PTTGC, COM7, STGT”.

 

Big Issue:

1) US weekly crude oil inventories dropped by more than 7.2m bbls, market forecast to increase 290k bbls.

2) US Manufacturing ISM jumped to 52.6 in June from 43.1, beating forecasts of 49.8.

 

Eyes on:

1) 2 July: US trade balance (May), Non-farm employment change (June)  

2) Eyes on Covid-19 situation

 

Technical View:

SET    Support : 1330/1325     Resistance : 1350/1360

 

With stocks: Continue holding stocks. Gradually take profit at  resistance 1360.

Without stocks: Short-term trading buy at supports 1330. Or if it breaks out 1350, follow buy and wait to take profit at 1360.

 

SET Index: The SET index likely to breakout 1350. The SET index closed at 1349.44 points (+10.41 points). The market saw buy back pressure in the afternoon session yesterday, driving the index to close at 1350 points (hit this level three times). If the market manages to open above this level this morning, the near term upside will open wider with the next resistance at 1360 points.