Maybank Kim Eng: Daily Strategy for Investors on March 12, 2019

Maybank Kim Eng Securities has made an analysis of the trading session of March 11, 2019, stating that SET moved in a narrow range with a light trading value. Buying pressure was seen on several retail companies stocks led by CPALL, HMPRO, GLOBAL and media stocks WORK.

However, the global plays stocks were continued under pressure such as PTTEP, PTTGC and TOP. The index closed at 1,627.4 points (-2.6 points) with a trading value of THB 30 billion, down from THB 34 billion the previous day.

Foreign investors continued to net sell Thai shares for the 11th  day by THB 320 million. Institutions switched to net sell by THB 297 million. There were net short on SET50 index future by 11,247 contracts.

 

Investment Theme
Retail sector remains in the spotlight: Following the 4Q18 earnings results report, the retail sector remains strong with a growth of 11% QoQ, +3% YoY. As of 2M19, the SSSG continues growing in a range of 2-5% (BIGC 2%, CPALL 2-3%, GLOBAL 5%, HMPRO 3%, MAKRO 3%). Apart from being a high season for spending, a strong recovery in tourists numbers, it also indirectly benefited from higher meat prices.

Maybank expects the 1Q19 earnings should grow about 10% YoY. In terms of sentiment, it is estimated that the retail sector should have a limited impact (mild positive) from the election results. Maybank finds that the sectors relying on investment and government spending may be affected by the election results. However, two sectors that may have a limited impact includes tourism and domestic consumption. Maybank chooses CPALL, BJC and SPA as representatives for the top pick.

 

Technical View
SET closes below support 1630 points, wider downside: The SET index fell in the afternoon session driven by strong selling pressure on the energy, petrochemical and transport sectors. The index slipped through the neckline support at 1630 points, meaning the downside widen as the index is likely to form a triple top reversal. The next supports are 1615 points and 1600 points. If it dips below support 1625 points intraday, Maybank recommends to stop loss. Or if the index rebounds, it is recommended to sell stocks to reduce portfolio and hold more cash.

 

Investment Strategy
1) Investors with stocks, if rebounds, take profit at resistance for cyclical trading. And if dips below 1623 points, take profit or stop loss.
2) Without stocks, wait and see, because the index almost dips below the low 1623 points, as the selling pressure may prevail. Look for it stops sliding at the next supports.

 

Maybank sets a support line at 1600 points and 1615 points, while setting a resistance line at  1635 points and 1645 points.

Keep an eye on
1) Trump to meet Xi Jinping on trade war talks on March 27.
2) Progress on high-speed trains linking three airports bidding on March 13
3) Thai election on March 24.