Thai Stocks Make a Slight Rebound prior to the CCSA Meeting on Covid-19 Measures

As of 10:11 local time in Thailand on July 9, 2021, SET Index rose 4.51 points or 0.29% to 1,548.18 points with a trading value of 11.5 billion baht.

 

Asia Wealth Securities (AWS) expected the SET Index today to move in a range of 1,530-1,565 points, following the CCSA meeting today (9 Jul) to announce measures to enhance the epidemic control measures.

In the short-term, the SET still has a negative sentiment from such factors, but compared to the previous lockdown announcement (24 Mar 2020), the SET rose 17% over the next two weeks. The stocks supported the market such as energy and petrochemical stocks including shares in the power producer group, stocks in communications and electronic components, shares in the media and entertainment sectors, stocks in the transport group while at present AWS estimate the SET has a limited downside after reflecting some concerns about the measures to be upgraded from yesterday, down 32.93 points (-2.09%).

However, risk pressures in the market are still the COVID-19 situation in the country, global COVID-19 mutation, still need to track the number of infected people around the world after Euro 2020 football (12 Jul), as well as the Tokyo 2020 Summer Olympics (23 Jul to 8 Aug), and concerns over changes in monetary policy among major economies.

The investment strategy is still Selective on stocks in the group that benefit from the Work From Home (Home Improvement) measure, export stocks that benefit from the depreciation of Thai baht.

 

The U.S. Energy Information Administration (EIA) reported a 6.9mn barrel drop in the U.S. crude reserves (expected to drop 4.0mn barrels) last week, while Crude reserves at Cushing, Oklahoma, the delivery point for the U.S. crude futures fell by 614,000 barrels. While Refined oil reserves Gasoline reserves decreased by 6.1mn barrels (expected decrease of 2.2mn barrels) and diesel reserves increased by 1.6mn barrels (expected increase of 171,000 barrels). However, the pressure factor remains unclear about the OPEC+ production policy, but AWS still believed that a conclusion can be reached within 1-2 weeks.

 

The latest baht was at 32.45 baht per USD continued to depreciate from the end of 2020 by more than Bt2.44 (8.1%), partly due to the BoT’s measures to adjust the foreign currency deposit account (FCD) criteria to increase the flexibility of transactions. These factors still have a positive effect on stocks that benefit from the Thai baht depreciation, especially stocks in the logistics group, stocks in the automotive parts group and electronic components. However, during the past 6 months, shares in these groups have averaged increased more than 45% so AWS focused on fundamentally upside stocks which are STA, ASIAN, TU, HANA, KCE, SAT, AH, MEGA, NER, EPG, SONIC and SMPC.

 

Core Investment

1) Stocks obtained benefit from Thai baht depreciation STA, ASIAN, TU, HANA, KCE, SAT, AH, MEGA, NER, EPG and SMPC.

2) Stocks obtained benefit from oil price increased PTTEP and PTTGC

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

4) Long term accumulative stocks (DCA) (Long term trading over 1 year) AO T, BEM, ADVANC, WHA, LH, CPALL, CPF, BDMS, HMPRO, BBL and KTB