Daily Strategy for Investors on May 23, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on May 22, 2019, stating on the SET Wednesday technically rebound driven by buying pressure on domestic play stocks led by financial AEONTS, KTC, MTC, SAWAD, power plants GULF, EGCO, BGRIM and retailers CPALL and HPRO.
The index closed at 1,626.9 points (+16.4 points) with a trading value of THB 50 billion, (THB 50 billion the previous day). Foreign investors net bought Thai shares for a second day by THB 2.3 billion, institutional investors net bought by THB 1 billion. There were net long on SET50 index future by 8,519 contracts.

Investment Theme: With clarity on politics, eyes on domestic play stocks
Foreign factors like the trade war remain a key factor influencing the investment sentiment. Impacts are divided into 2 parts;
1) Exports see negative growth of 3.6%, leading to GDP forecast cut.
2) Maybank began to see impacts on the global play sectors in terms of 1Q19 earnings; the energy (-30%YoY), petchem (-50%YoY), electronics (-30%YoY).
Maybank estimates that the impact would continue to pressure 2Q19 earnings as a whole, except for PTTEP that may benefit from rising crude oil price and sales volume.
For the domestic political factor, it is getting clearer with the government forming, only wait for the Democrat and Bhumjaithai parties to confirm their stance.
If 1) both parties (103 MPs) join the PPRP-led alliance to form the government as previously expected, the concerns about the deadlock will be eased down. Maybank believes the domestic play stocks may see a buying pressure again such as retailers, financial and industrial estate.
But if 2) either or both parties refuse to join the PPRP-led alliance, the number of the government MPs for the lower house is less than 250, Maybank believes the SET may be pressured constantly and may slip through 1600 points.  

Investment Theme
The SET index dropped more than 70 points, leading to earning yield gap rising to maintain above the 10 years average at 4.27% (10-yrs avg is 4.25%). This is an attractive level for investment.

Big Issue
The Commerce Ministry reported April exports growth of -2.57%, 4M19 is -1.86%. Brent dropped 1.95% following US reported crude inventories rising to 4.7m bbl.

Stock Pick and Trading Idea
1) Given the aforementioned foreign factors pressuring the investment sentiment, low-risk takers should halt your investment to wait for the clarity.   
2) For high-risk takers, TRADING BUY VGI as Maybank upgraded target price to THB 10.70, including the value of Kerry Express.

Technical View
Able to hold above neckline 1620, likely to rebound in the near term: The SET index opened with a gap, driven by buying pressure on big caps in almost all sectors, leading it to manage to hold above the neckline 1620. That is coupled with the modified stochastic indicator started to bounce up from the oversold zone. This means Maybank saw a false break that slipped through the neckline. Now, once it manages to maintain above 1620, in the near term  Maybank sees that it may continue technically rebound. But since the trend is moving in a sideways range of 1620-1655, Maybank finds that it may be a brief rebound.

Investment strategy
1) Investors with stocks, Hold stocks for rebound trading if bought below 1620 and take profit at resistances 1635 and 1645.
2) Without stocks, if weakens but holds above 1620, accumulate stocks 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
House of Representatives opens on May 24-25 and select the speaker of the House.