Daily Strategy for Investors on March 26, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on March 26, 2019, stating that SET yesterday faced a high net sell from CPALL, PTT, IVL, PTTEP, KBANK, SCB, ADVANC. On the other hand, STEC rose despite how bad the market was.

SET closed at 1,625.9 points (-20.3 points) with a trading value of THB 47 billion (THB 46 billion the previous day) Foreign investors continued to net sell Thai shares by THB 1,643 million, institutional investors net sell by THB 1,188 million. There were net short on SET50 index future by 16,356 contracts.

Market to swing as uncertainties remain, wait & see the opening of the House: The Election Commission (EC) announced so far Pheu Thai Party‘s unofficial tally of constituency seats stood at 135-137,vs the Palang Pracharath Party‘s (PPRP) 119, Future Forward 87, Democrats 55, Bhumjaithai 52, Thai Liberal 11 and Chartthaipattana 11.

It is likely that 1) PPRP is now poised to bring Prayuth Chan-Ocha back as prime minister. 2) The Lower-House saw both sides with almost equal seats at about 240-260, with Bhumjaithai party plays as a key variable. It needs more than 251 seats to win if each side wants to win with the law enforcement. Normally, the votes must be more than 30 votes higher if any side wants to stabilise.

Maybank recommends waiting for the EC’s official results announcement on May 9. If both sides have similar numbers it will become a factor to pressure the stock market until the opening of the House during June to July. For foreign factor, U.S. Treasury bond yields continued to suggest difficult times ahead for the world’s biggest economy, with the gap between short and longer-dated interest rates at the lowest levels in a decade, even as analysts and policymakers question the meaning of one of the markets most reliable recession indicators.

 

March Investment Theme
The SET this week should swing in a range of 1620 points +/- to wait for 3 factors; 1) EC official results. 2) Progress on US-China trade talks on March 27-28, 3) US bond yield curve. Recommend hold cash no less than 40%. Hold BEM, CPALL and PTTEP.

 

Big Issue
Apple announces credit card in partnership with Goldman Sachs, Mastercard.

 

Stock Pick & Trading Idea
Gradually accumulate stocks with limited impact from Thai election. Accumulate TU, TP ฿21.70/share, on strong 1Q19 earnings. Tuna price remains good at USD1,480-1,500/ton, so margin (%) should be strong. Shrimp business benefits from selling price adjustment and expand market to products with higher margin. Downside risk declined as it has allocated provision for legal case of Chicken of the Sea and disclosed the loss-making salmon business in Scotland last year. The earnings for this year are expected at THB 5.9 billion (+12% YoY). Technically, if breaks 18-19, good to go.

 

Technical View
The SET index sharply fell driven by a heavy sell-off on big caps. It fell in the morning and opened a gap, leading to a candlestick of a false break signal at the upper band of the sideways channel at 1645. Despite it continued to weaken in the afternoon, it managed to hold above the support at the low 1615. Coupled with the modified stochastic indicator on the 60-minute chart entering the oversold zone, so in the near term, if it holds above the supports 1615-1620, it is a chance for rebound trading.

 

Investment Strategy:
1) Investors with stocks, If rebounds intraday to test the resistance, sell stocks to reduce portfolio at resistances.
2) Without stocks, gradually buy stocks if weakens intraday, only for a rebound trading.

 

Maybank sets a support line at 1600 points and 1620 points, while setting a resistance line at  1635 points and 1645 points.

 

Keep an Eye on
1) EC considers Brexit deal extension.
2) The US to talks with China on March 27.