Daily Strategy for Investors on March 28, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on March 28, 2019, stating that  SET yesterday swung in a tight range with a thin trading value, driven by buying pressure continuing on PTT and GULF, together with the out of home media stocks VGI, MACO and PLANB.

The index closed at 1,629.4 points (-2.9 points) with a trading value of THB 41 billion, (THB 38 billion the previous day). Foreign investors switched to net sell Thai shares by THB 2.3 billion, institutional investors net sold by THB 1 billion. There were net short on SET50 index future by 3,758 contracts.

 

Investment Theme
Yesterday Pheu Thai party claimed to have secured a majority in the lower house of parliament after banding together with six other political parties. Besides Pheu Thai, (137-138 seats), the alliance includes Future Forward (87 seats), Thai Liberal or Seri Ruam Thai (11 seats), Prachachart (6 seats), Pheu Chart (5 seats) and Thai People Power (1 seat), total 247-248 seats. The counting was 95% completed so far.

However, even though the New Economic Party (6 seats) did not show up yesterday, it is likely the party would participate after it announced last night the party is ready to join the Pheu Thai party. If based on the signing of these party leaders, they may garner up to 253-254 seats in the lower house.

 

Initially, Maybank expects the numbers of PMs should remain at this level until the House of Parliament is open to elect the Speaker of the House in June. Therefore, Maybank estimates the stock market will swing around 1,620/45 points until all is clear.

However, for foreign factors in the next few days, Maybank expects to see a clearer picture of the US-China trade talk outcome. If coming out well, with partial cancellation of tax limits from USD250b, it may be a positive factor for the global capital market. However, investors are advised to follow more in-depth details such as some companies may be affected if China chooses to change its target of importing goods from the Asean region to the US to reduce its trade surplus, such as pork, electronics circuit boards, plastic and rubber products.

 

March Investment Theme
The SET this week should swing in a range of 1620/45 points +/- to wait for 3 factors; 1) EC official election 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
Thailand EC to officially announce the election results tomorrow. British parliament postpones Brexit deal scrutinize from March March 29 to April 12 or May 22.

 

Stock Pick & Trading Idea
The stock market may experience high volatility to react to the political movements and the EC announcements on the election. Maybank suggests investors wait & see for the clearer picture of the election results announcement tomorrow.

 

Technical View
The SET index experienced high volatility all day driven by strong selling pressure on the energy, transports and hospital stocks. The index was unable to surpass the gap at 1637 resistance. In the short term, if it weakens but holds above 1620-1625 of the uptrend subchannel, it is likely to regain to close the gap at 1637 and 1645. If it rebounds intraday, consider selling pressure on resistance 1637 and 1645. If selling is strong, take profit for the next trading cycle.

 

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

 

Maybank sets a support line at 1613 points and 1620 points, while setting a resistance line at  1637 points and 1645 points.

 

Keep an Eye on
1) US-China trade talks on March 27-28.
2) Pheu Thai and other parties announce their stance this morning.