Daily Strategy for Investors on January 10, 2020

Maybank Kim Eng (Maybank) released an analysis for the trading session on January 10, 2020, indicating the essential events in the stock market as follows:

 

The SET yesterday sharply gained driven by easing tensions in the Middle East combined with positive expectations on trade agreement signing. The market closed at 1,579.64 (+20 points) with a trading value of THB66b (THB65b the previous day).  

Foreign investors net sold Thai shares by THB1.413b. Institutional investors net bought by THB1.261b. There were net Long on SET50 Index Futures by 15,993 contracts.

 

Stock Picks & Trading Idea

BDMS (TP THB28):  The expectation core earnings should continue expanding in 4Q19 from a low base in 4Q18 when EBITDA margin grew only 17% vs current growth of 21-22%. Growth momentum should continue in 2020 after it passed a 5 years of investment period, coupled with deteriorating air pollution situation that may boost positive psychological sentiment to the healthcare sector.

 

Investment Theme

Expect 2020 Budget Act passes, coupled with trade talks next week: The risky assets markets yesterday strongly rebound in response to easing tensions in the Middle East. Today, Maybank suggests investors keep an eye on domestic factors-2020 Budget Act, agenda 2-3, is expected to pass with the total THB3.2t. Following a couple days of scrutinisation (Jan 8-9), there is nothing much and things should settle within today. If the act passes, it will go to the next process which is the consideration by the Senate. It is required that the Senate should proceed within 20 days after the Act was submitted to the Senate. Initially, Maybank expects that the Senate should consider the Act within Jan 20, 2020. Then it would be the PM’s turn to submit to HM the King for royal approval and enforce it. If things go as expected, the budget reimbursement will proceed in February. 

 

As a result, money would be injected into the system, boosting confidence among investors domestically and internationally. Looking ahead to the next week, the stock market should be driven by the progress in the trade negotiations as China leaders scheduled to officially visit USA on Jan 13-15 to officially sign the phase one trade deal. This translates into an additional positive psychological sentiment to the investment.   

 

Today’s SET’s support level is at 1570 and resistance at 1585/1592. Maybank recommends accumulate strong fundamental stocks (BDMS, GPSC, BEM, PTTEP, IVL, TOA) and good dividend (BBL, LH, AP, TISCO).   

 

Big Issue

1) US House to vote on limiting Trump’s actions against Iran

2) Britain’s parliament gave final approval to Brexit on Thursday, paving the way for the country’s departure from the European Union on January 31

 

Eyes on

8-10 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 1560/1570 and a resistance level at 1585/1595.