Daily Strategy for Investors on February 24, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on February 24, 2020, indicating the essential events in the stock market as follows: 

 

Investment Ideas:

1) IMF trimmed the FY2020 China GDP forecast to 5.6% (the latest estimate was 6.0% in Jan) due to the effects of COVID-19 outbreak, affecting the global economic growth of about 0.1%.  

The situation of the COVID-19 virus in China is starting to grow at a lower rate but the situation outside China is worrisome after experiencing the expansion of the outbreak. Lastly, South Korea announced to raise the alarm from the outbreak of the COVID-19 virus to the “RED” level, the highest level, after the number of people infected in the country rose sharply, reaching 602 cases, while the death increased to 5 cases.

2) Inverted yield curve returned to drag the overall investment again after last week, the short-term government bond yield was higher than the long-term bond, reflecting a signal of recession. At present, the situation has resumed to the normal level, which the 2-year and 10-year US bond yield stood at 1.354% and 1.473%, respectively.   

3) Domestic positive factors are resolved, bolstering short-term investment from (1) greater government stability, especially in discussions with distrust of the government between 24 – 27 February from the case of the decision of the Constitutional Court to disband the Future Forward Party because of the case of Bt191mn lending, resulting 16 party executive directors being deprived of political rights for 10 years and (2) the FY2020 budget act that is expected to be present to His Majesty this week and disbursement of statements at the beginning of March 2020.

4) GULF – The Board of Directors has approved the change in the par value from Bt5.00 to Bt1.00 (No effective date has been determined) which is waiting to propose to the Annual General Meeting of Shareholders for the year 2020 for approval on 8 April. Dividend payment for the year 2019 at the rate of Bt1.30 per share, posted an XD sign on 5 March and dividend payment on 28 April.

5) The government has determined that diesel B10 is a base oil instead of B7 diesel which increase in margins for retail prices with Diesel price B10.00 is Bt3.00 per liter cheaper than B7 (From Bt2.00) and B20 is Bt3.50 per liter cheaper than B7 (From Bt3.00) effective from 1 March onwards. AWS has a positive view for BCP (TP Bt32.00), GGC  (IAA Bt12.40) and EA (IAA Bt59.00).

 

AWS forecasts the SET for this week (24 – 28 Feb) to be in range of  1,471 – 1,526 points and today, expect the SET to be within the range of 1,490 – 1,519 points (with support at 1,490 1,483 and 1,471 points and resistance levels at 1,501 1,507 and 1,519 points).   

 

Theme Investment: 

1) Accelerate disbursement of government budget in 2020. AWSschooses CK (TP Bt22.00), SEAFCO (TP Bt7.30), WHA  (TP Bt5.20), and KKP (TP Bt80.00). 

2) Government stimulus measure, AWS favours AOT (TP Bt84.00), CPALL (TP Bt94.00), and HMPRO  (TP Bt19.00). 

3) Global trade has eased and Thai baht depreciates. AWS chooses HANA (TP Bt39.00), TU (TP Bt18.40), and CPF (TP Bt33.00).

4) Interest rates cut. AWS chooses ORI (TP Bt10.00), SPALI  (TP Bt20.00), MTC (TP Bt75.00), KKP (TP Bt80.00), and TISCO (TP Bt112.00).