Daily Strategy for Investors on July 8, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on July 8, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

Investment Overview Today – AWS expects the SET to be volatile today due to concerns over foreign COVID-19 that has put pressure on investment again, reflected by stock markets and commodity markets last night. The Dow stock market was -1.51%, crude oil contracts closed down and gold contracts adjusted up while VIX Index slightly increased. However, there are still interesting issues in the country to follow the cabinet meeting. The market expects to see additional stimulus measures. For investment strategy, AWS focuses on stocks in the Defensive Stock (DCA) group, as well as stocks with specific positive factors such as tourism stimulus measures (AOT, AAV, ERW, and MINT) and the bidding for the Orange Line (CK and BEM).

 

EC cut the Eurozone GDP in 2020-2021 down while the latest European economic numbers are lower than expected – The European Commission has lowered the Eurozone economic forecast to -8.3% in 2020 (the original -7.4%) and the year 2021 wiII return to grow by 5.8% (originally expected at 6.1%). The Federal Statistical Office of Germany (Destatis) reported industrial production (including production in the energy and construction industry) in May increased 7.8%MoM as a result of the lockdown relaxation, but it still decreased 19.3%YoY. However, the report was less than expected.

 

Overseas factors are uncertain – From the U.S. view which comments from the Fed’s president, the San Francisco branch of Atlanta and the Richmond branch that there is the negative view on the unemployment rate in the U.S., although in June dropped to 11.1%, it is still considered a high. Including the concern about the spread of COVID-19 wiII affect to the economic recovery of the U.S. AIso, the attitude of the working group of the U.S. leaders which needed the congress to limit the new COVID-19 impact mitigation measures to USD1.0triIIion or Iess, according to the U.S. vice president’s disclosure with BIoomberg so it negatively affects the investment overview.

 

Overview.  Earnings Preview: AWS expects that earnings of the banking sector in 2Q20 wiII drop both QoQ and YoY – The negative factors which are the continued decline in NIM, the reduction of fee income and the reserves at a high level. Although the overall view of every bank wiII be set aside excessively to support the short-term risk, the overall economy is highly uncertain and the risk from debt quality deteriorated are factors which pressure the earnings of the banking sector. AIso, the investment pressures in the banking sector are still concerned about the acceleration of the NPL during 2H20 as a resuIt of the measures to heIp debtors (reduce interest, reduce installments, extend the repayment period and postpone payment of principal and / or interest for a period of 3-6 months) which have not yet cIassified as NPL (beginning 1 March 2020) so AWS expected to have a noticeable effect in 4Q20. However, AWS believes that the share price reflects the weak earnings performance risk so AWS has selected KKP (BUY; TP Bt63.00) as a top pick of the banking sector.

 

Technical View – Today, AWS expects the SET Index to move in a range of 1,361 – 1,385 points (support at 1,368 1,361 and 1,349 points and resistance at 1,379 1,385 and 1,397 points). The recommended stocks are COM7, BEC, CBG, TKN and PTT.

 

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