Daily Strategy for Investors on April 10, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on April 10, 2019, stating that SET yesterday sharply gained, driven by strong buying pressure on the energy and petrochemical sectors PTTEP, PTTGC and IVL, property SPALI and AP and financial KTC and TCAP.

The index closed at 1,657.7 points (+11.5 points) with a trading value of THB 44 billion, (THB 26 billion the previous day). Foreign investors switched to net buy Thai shares by THB 3.2 billion, institutional investors net bought by THB 765 million. There were net long on SET50 index future by 28,972 contracts.

 

Investment Theme: IMF cuts global growth outlook, US and Europe down, China up:
The International Monetary Fund (IMF) cut its outlook for global growth to the lowest since the financial crisis amid a bleaker outlook in most major advanced economies and signs that higher tariffs are weighing on trade.

The world economy will grow 3.3% this year, down from the 3.5% the IMF had forecast for 2019 in January, the fund said Tuesday in its latest World Economic Outlook. The US GDP forecast is cut to 2.3% (from 2.5%), Europe to 1.3% (from 1.6%) including Canada and Mexico. However, China GDP outlook is revised up slightly to 6.3% from 6.2% while Asean 5 (including Thailand) remained unchanged at 5.1%. It assessed that the region will benefit from the economic stimulus measures through financial and fiscal policy.

This is in line with Maybank’s view towards this year investment outlook on the theme “Happy Problem“. Overall, Maybank finds that these issues present positive sentiment to speculation in the emerging markets.

 

April Investment Theme
The SET in April should swing in the uptrend channel with a range of 1,630-1,680 points. Recommend investors holding cash not less than 40%. BUY global plays stocks like PTTEP, BCP and HOLD BEM and CPALL.

 

Big Issue
1) IMF cuts global growth outlook from 3.5% to 3.3%.
2) The US JOLTs job opening remains at 7.087 million, lower than expected at 7.55 million.

 

Stock Pick & Trading Idea
1) Trading Buy PTTEP with a target price of ฿150.0/share. Another THB 8 upside from Murphy. EBITDA is expected to grow by 15% in 2020. While crude oil prices rise after OPEC reports the lowest production in 4 years at 30.3 million bbl last month. And the recent US boycott of Venezuela oil companies (Producing the lowest in 16 years at 740 billion bbl) and Iran is a short-term catalyst.

2) Gradually accumulate stocks with 2 themes; sector expected to face limited impact from political factors led by retail BJC with a target price of ฿65.00/share and tourism SPA with a target price of ฿15.80/share and sectors with limited downside, recovering margin with attractive valuation led by BCP with a target price of ฿39.00/share and BCH at ฿20.00/share.

 

Technical View: Likely to gain and test the neckline 1675, if breakout, more upside
The SET index sharply gained, driven by strong buying pressure on the energy, petrochemical and transports sectors. It is likely the index may be able to breakout the resistance 1656 (EMA200Day). In the near term, the momentum should continue and drive the index to test the resistance level of the reversal Head and Shoulders at 1675. If it weakens intraday, accumulate stocks at the supports 1645-1650. For the mid to long term, if it breakout 1675, the outlook will shift to an uptrend.

 

Investment Strategy:
1) Investors with stocks, let profit runs until it reaches 1675. If it fails to breakout, gradually take profit for a short term. But if it dips below 1645, lock profit.
2) Without stocks, gradually buy stocks if weakens intraday to supports 1645 and 1650 for a rebound trading at 1675.

 

Maybank sets a support line at 1630 points and 1645 points, while setting a resistance line at  1675 points and 1690 points.

 

Keep an Eye on
1) The EC to unveil formula to calculate party-list MP.