Daily Strategy for Investors on May 27, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on May 27, 2019, stating on the SET on Friday swung in a range driven by selling pressure on PTTEP before gaining in the afternoon, pushed by buying pressure on domestic play stocks like CPALL, STEC, MTC and SAWAD.
The index closed at 1,614.1 points (+4.3 points) with a trading value of THB 55 billion, (THB 47 billion the previous day). Foreign investors switched to net buy Thai shares by THB 366 million, institutional investors net sold by THB 2 billion. There were net short on the SET50 index future by 6,900 contracts.

Investment Theme: SET to swing by 2 key factors (Trade war & Thailand’s politics)
Two key factors pressuring the investment sentiment most remain the US-China trade war and domestic political issue. Maybank has a neutral to a mild negative view on the trade war issue. In the past three weeks, the global stock markets including SET have declined by about 4-6%, partly priced in such issue. However, Maybank believes that the equity markets may continue experiencing a selloff if the trade war escalates to the tech war.
So Maybank suggests investors follow up the 12th round of trade talks between China and US (Trump and Xi Jinping) in Japan in the late of June.
For a domestic factor, the politic became clearer as the House of Representatives has elected former prime minister Chuan Leekpai (Democrat party) as the Speaker of the House with 258:235 votes and Suchart Tancharoen (PPRP) deputy speaker 248:246. This reflected that there are two sides competing clearly.
Maybank has a neutral view on this issue and believes that the vote may be the same with voting for legislation enforcement. In conclusion, Maybank finds that this has helped ease the concerns about the deadlock at some level.
Investment Theme
Given the SET lacking of positive catalysts and uncertainties of the trade war that may escalate to the tech war, Maybank estimates the SET index to technically rebound in a range of 1,630 +/- points. Recommend domestic play stocks.

Big Issue
1) UK Prime Minister Theresa May resigns, to leave office on June 7 Parliament opens after King’s ceremony on May 25.
2) ICAO certifies Thailand’s aviation standards.
3) Trump meets Japan’s Emperor Naruhito.

Stock Pick and Trading Idea
For high-risk takers, recommend trading buy domestic play stocks led by CPALL (target price at THB 86) and MTC (Consensus target price at THB 56), earnings expected to grow 26% this year, EA (target price at THB 57.75, expecting 2Q19 earnings to hit new record high, boosted by 80 MW wind farm.

Technical View
SET fails to hold above 1620, the main trend remains downtrend: The SET index was pressured by the selling pressure on energy sector, making it to open with a gap in the morning. After that, it gained driven by buying pressure in the afternoon and closed in a positive terrain. But given it failed to close above the neckline at 1620, the outlook remains a downtrend. So if it rebounds intraday, take profit to reduce portfolio at resistance levels. If the index manages to close above 1620 today, the outlook should switch from downtrend to sideways.   

Investment strategy
1) Investors with stocks, if rebounds intraday, take profit at resistances to reduce portfolio. But if dips below 1600, stop loss.
2) Without stocks, wait until it holds above 1620, then trading buy.

Maybank sets a support line at 1600 points and 1610 points while setting a resistance line at 1620 points and 1640 points
Keep an Eye On
1) US to report 1Q19 GDP on May 30 and China reports PMI Manufacturing.
2) Parliament to vote for Prime Minister during May 31-June 9.