AWS Expects More Downside in SET Index as Covid Situation Pressures the Market

Asia Wealth Securities (AWS) expected the SET Index today to move in a range of 1,570-1,600 points. The SET still lacks positive investment support and there is an increased risk from the COVID-19 situation that continues to spread in Asia, including in some European countries which increased chances of lowering economic growth forecasts and tight valuation, including Thailand’s opinion from the BoT on the overall economy that was affected by the third wave of epidemic in May, affecting the consumption and investment of the private sector and still affecting until June, causing the BoT’s GDP projection to have a downside, despite the 2021 GDP reduction from 3% to 1.8% at the latest MPC meeting.

 

AWS expected the Thai stock market will find that it has more downside, but still maintained a selective buy investment strategy, stocks with unique positive factors, weight the portfolio in proportion to stocks that are less than cash (40% stocks) to reduce the risk of short-term volatility.

 

The U.S. Government Information Agency (EIA) reported the U.S. crude reserves last week (ending 25 Jun) which dropped 6.718mn barrels, more than the Market Consensus expected a drop of 4.7mn barrels. These issues are positive for Oil Play, especially PTTEP (TP Bt140), including PTT and refinery groups, especially PTTGC (Bt82) which the share price is laggard when compared to the group.

AWS expected the OPEC+ meeting on July 1st will result in an increase production by 0.5-1.0 mn barrels per day in Aug. Even if the supply increases, however, the impact on crude oil prices is less because the projected demand for crude oil in 2021 is expected to grow as much as 6.0mn barrels per day (OPEC forecast), while 6M21 crude oil demand growth of 5.0mn barrels per day.

 

Core Investment

1) Laggard Play (Trading within 1-2 months) – ADVANC, CPF, KBANK, BBL, MTC, EGCO, SPALI, LH, WHA, BDMS, BEM and BJC

2) Countdown 120 Days Re-Opening (Trading within 3 months) – BAM, BA, BEM, BDMS, BJC, BTS, CPALL, ERW, CENTEL, CRC, SPA, HMPRO, WHA. AU and M.

3) Stocks expected good performance in 2Q21 (Trading 1-3 months) – BCH, CHG, HMPRO, GPSC, BPP, PTTGC, IVL, PTTEP, PTG, SONIC, KWM, ORI, SPALI, KKP, KBANK and MTC

4) Dividend Play (Middle-term trading 6-12 months) – LH, QH, ORI, SPALI, ADVANC, KKP, TISCO, STA, STGT, TMT, TVO and STI

5) Long term accumulative stocks (DCA) (Long-term trading over 1 year) – AOT, BEM, ADVANC, WHA, LH, CPALL, CPF, BDMS, HMPRO, BBL and KTB