ASPA Recomm. Buying Safe Stocks amid Volatility in the Market, Top Picks: BDMS-NER-MCS

SET Index made a rebound on July 9, 2021, after a plummet by 32.93 points or 2.09% to 1,543.67 points a day earlier in concerns of Covid-19 situation in Thailand.

As of 16:21 local time in Thailand, the SET Index increased 9.41 points or 0.61% to 1,553.08 with a trading value of 76 billion baht. 

According to RHB Securities (Thailand), the Thai stock market was volatile in the morning session as investors awaited the results of the Centre for Covid-19 Situation Administration meeting regarding the implementation of a full lockdown following the country’s Covid-19 infection rate skyrocketing. If tougher measures to control the covidCovid-19 pandemic are imposed, the index has a chance to challenge the 1,507 level, but is predicted to trade in the range of 1,529 – 1,550 points today.

Meanwhile, Asia Plus Securities (ASPS) expects the SET Index to fall further as Covid-19 concern is pressuring the global money market again, so fund flow switches to safe assets, weakening stock and bond yields. During the previous lockdown, SET Index fell 4-6% but later rebounded. However, confidence has dropped this time, so SET Index is expected to not rebound until control measures pay off (when new case count is lower than recovered case count). Top  picks  are BDMS, NER, and MCS.

The market is concerned about rapid Covid-19 infection and a potential lockdown. Thus, the SET Index plunged 51 pts or 3.2% in the past two days. Lockdown concerns tended to weaken SET Index by 4-6%. We see a major supportive range at 1,510 points.

SET Index is still pressured by uncertainty about Covid-19 and lockdown as new variants are more contagious than before. ASPS recommends holding 20-30% in cash, waiting for new case count to drop lower than recovered case count, while buying safe stocks with particular positive factors: 

Bangkok Dusit Medical Services (BDMS) – Defensive healthcare is suitable in this situation and benefits from higher revenue from examination, treatment, and vaccine services.

North East Rubber (NER) – Exporter with strong profit growth in 2Q21 thanks to weak Thai baht.

M.C.S. Steel (MCS) – Favorable for low fluctuation, high dividend, and strong profit growth in 2q21 Thanks to weak Thai baht against Japanese Yen.