Daily Strategy for Investors on April 26, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on April 26, 2019, stating The SET yesterday moved in a narrow range, driven by buying pressure on PTTEP after reporting better than expected earnings. GULF, OSP and MAJOR also gained.

The index closed at 1,673.3 points (-0.1 points) with a trading value of THB 37 billion, (THB 46 billion the previous day). Foreign investors switched to sell Thai shares by THB 599 million, institutional investors net bought by THB 744 million. There were net long on SET50 index future by 4,783 contracts.   

Invest theme: Dollar appreciates against major currencies around the world
Dollar Index has risen in strength compared to other currencies around the world. In addition to US economic data figures and more than 80% of listed companies (S&P500) reported better 1Q19 earnings reports, other factors that make many currencies weakening are from economic figures, such as adjusting GDP estimates, inflation lower than expected, leading the central banks to signal more dovish approach.

That includes political problems in each country, such as England, Germany, Italy, Australia and Canada. And if compare USD against the ASEAN region’s currencies in April Maybank found that only the Indonesian Rupiah currency (expected as a result of the election) and the Philippines’ Peso that appreciated while other currencies are weak in the same way. The Thai baht depreciated by 0.9%.

In the short term, this issue should put pressure on investment in Asia and emerging markets. However, Maybank advises investors to focus on the yuan/dollar, which is considered a leading currency in emerging markets. At present, it is still moving in the area of 6.7 yuan (7.0 yuan level is a worrying level).  Maybank estimates the SET should move in a range of 1,660-1,680 points.

Investment theme in April
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%. HOLD PTTEP, BEM, and BJC

Big Issue
CEO survey expects Thailand’s economic growth of 3-4% for 6M19.

Stock Pick & Trading Idea
Gradually Accumulate BEM, target price at THB 12.00. The share price YTD is 15% laggard vs BTS as it waits for the progress of the expressway concession renewal. Maybank believes the issue should be finalized in the next few months. Maybank has positive view on this issue. Recently, new electric trains (Blue Line Extension) have arrived Thailand and prepare to test run before it starts operation officially in 3Q19. It will fully operate in 1Q20, expecting passengers to rise by 45-50% to 550k trips/day.  

Technical View
If holds above ST support 1665, still positive. But if fails, lock profit: The index corrects for the sixth day, and fails to extremely breakout 1680. The candlestick with thin body indicates that it is indecisive. So, as long as the index maintains above 1665-1670, it is likely to continue gaining with the next resistances at 1680 and 1690. But if it dips below 1665, it may slide for a correction at around 1655 area (EMA200 Day) for a while.

Investment strategy
1) Investors with stocks, if it dips below 1665, lock profit or if rebounds to test 1680+/-, partly take profit for the next trading round.
2) Without stocks, for risk takers, gradually buy stocks at support levels 1665-1670 for a brief rebound trading and sell stocks at resistances 1680 and 1690.  

Maybank sets a support line at 1655 points and 1665 points while setting a resistance line at 1680 points and 1690 points.

Keep an Eye On
US reports GDP on Apr 26.