Daily Strategy for Investors on January 8, 2020

Maybank Kim Eng (Maybank) has made an analysis for the trading session on January 8, 2020, pointing out some of the must-know events in the equity market as follows:

 

The SET yesterday sharply gains driven by strong buying back pressure on stocks that price previously fell on the Middle East tensions. Heavily bought stocks were BAM, GPSC and ADVANC. Strong selling pressure was on banking stocks. The market closed at 1,585.23 (+16 points) with a trading value of THB62b (THB71b the previous day).

Foreign investors net bought Thai shares by THB820m. Institutional investors net sold by THB216m. There were net Long on SET50 Index Futures by 9,654 contracts.

 

Stock Picks & Trading Idea

PTTEP (TP THB140):  Positive momentum fuelled by tensions in the Middle East that pushed crude oil prices up in the short term, combined with 4Q19 earnings outlook likely to recover QoQ driven by sales volume expected to increase from full quarter recognition of sale volume of Malaysian fields and resumption of PTT’s gas intake from Bongkot as normal.

 

Investment Theme

Iran Strikes Back: Missiles Rain Down On American Forces In Iraq, increases tensions: Iran struck back at the United States for the killing of a top Iranian general early Wednesday, firing a series of ballistic missiles at two Iraqi bases housing U.S. troops in a major escalation that brought the two longtime foes closer to war.

Iranian state TV said it was in revenge for the U.S. killing of Revolutionary Guard Gen. Qassem Soleimani, whose death last week in an American drone strike near Baghdad prompted angry calls to avenge his slaying.

This has escalated tensions in the region as Maybank believes it shall prolong and must be closely monitored. Consequently, the Asian stock markets fell at an average of -1.5% this morning, US Dow Jones Futures plunged -340 points, crude oil prices surged by +3.6% and gold price jumped to USD1,600/Oz, the highest in 7 years. For domestic factors, the Bank of Thailand yesterday revealed its economic growth forecast of 2.8% in 2020, down from 3.3% forecast in September. Details are as follows;

1) Exports saw worse than expected contraction with slower than expected recovery. It tends to grow 0.5% this year, from -3.3% in 2019.

2) Tourism likely to continue expanding, expecting international tourist arrivals of 41.7m, from 39.9m in 2019.

3) Public spending and private investment may grow at a slower pace than expected, partly due to postponement of state-owned enterprises investment including co-investment in megaprojects between public and private sectors.

4) Private consumption may slow down due to decline in income and employment. The private consumption is forecast to expand by 3.0% in 2020 vs 4.4% in 2019, due to shrinking income, household confidence, higher household debts and drought issue which is a risk.

 

Today’s SET’s support level is at 1565 and resistance at 1580. Maybank recommends gradually accumulate strong fundamental defensive stocks (BEM, GPSC, PTTEP), good dividend (BBL, LH, AP, TISCO).

 

Big Issue
1) Iran struck back at the United States for the killing of a top Iranian general early Wednesday, firing a series of ballistic missiles at two Iraqi bases housing U.S. troops in a major escalation that brought the two longtime foes closer to war.

 

Eyes on
8-9 Jan: 2020 Budget Act consideration
Mid-Jan: 4Q19 earnings results announce
20-21 Jan: BOJ meeting
21 Jan: Constitutional Court to rule on Future Forward Party case
23 Jan: ECB meeting
28-29 Jan: FOMC meeting
30 Jan: BOE meeting

 

Maybank has set a support level at 1550/1565 and a resistance level at 1585/1595.