Daily Strategy: AWS Recommends Selective Stocks on a Potentially Volatile Market

Stocks in Asia are trading mixed on Wednesday as China’s official manufacturing Purchasing Managers’ Index for September showed an unexpected contraction.

On September 30, 2021, Thailand’s SET Index opened at 1,618.58 points, up 1.60 points or 0.10%.

As of 10:17 local time in Thailand, Nikkei plunged 0.36% and Hang Seng Index slipped 0.91%. Meanwhile, Shanghai Composite rose 0.34% and Australia ASX 200 surged 1.32%. 

Over the night, U.S. stocks were slightly higher on Wednesday after tech stocks dipped again as the 10-year Treasury yield hit a high of 1.56%. Nasdaq gained 0.24%, S&P 500 rose 0.24% and Dow Jones also advanced 0.24%.

Asia Wealth Securities (AWS) expects the SET today to move in a range of 1,605-1,625 points. The SET returned to outperform the region after the MPC has a more positive view on the economic outlook for the remainder of 2021 and year 2022, especially consumer confidence is expected to return to expand, including the overview of tourism in 2022 that  will gradually recover, building confidence in the investment overview, especially the positive signal from Thai baht return to a slight appreciation after depreciating sharply in the past 2 months.  

In the short-term, AWS believes the SET still has foreign pressure factors. This is a short-term limited upside factor after the Fed signaled an earlier-than-expected QE tapering, raising concerns about U.S. inflation from supply chain issues, as well as controversy in Congress about raising the U.S. debt ceiling. 

For investment strategy, AWS continues to focus on Selective stocks with unique positive factors such as Oil Play (PTTEP, IRPC and PTTGC), Laggard Play (OR and PTG), stocks benefiting from recovering domestic purchasing power (CPALL, MAKRO, BJC, CRC, HMPRO and DOHOME), stocks that benefit from the weak baht (TU, HANA, KCE, PACO, MEGA and SMPC).