Daily Strategy for Investors on May 30, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on May 30, 2019, stating on the SET on Wednesday declined as it was pressured by the selling of big caps like SCC, BDMS, CPALL and KBANK.
The index closed at 1,619.3 points (-12.6 points) with a trading value of THB 55 billion, (THB 200 billion the previous day). Foreign investors continued to net buy Thai shares by THB 1.247 billion, institutional investors net sold by THB 4.651 billion. There were net short on SET50 index future by 15,694 contracts.

Investment Theme: Stock markets concern about US inverted yield curve
The US-China trade war which started last year has continued to affect the global economy to slow down. Maybank began to see a signal of slow economy through declining PMI manufacturing figures of the world’s leading countries including US, China and Europe.
Currently, IMF has cut down the global GDP growth forecast twice in the past six months. This has raised concerns about the global economic growth in the long run. As a result, profit was taken in the stock markets and shifted to the bond market. Recently, the US 10 years bond yield has dropped from 3.2% to 2.2%.
Meanwhile, FED has not clearly signaled an effort to cut policy interest rate, causing the long term bond yield declined at an accelerated pace. As a result, it caused an inverted yield curve incident as it has happened in December last year where the bond yield has inverted in the US 3/5 years bond. It currently happened in the 3 month/12 month, 3 month/10 year.
Maybank recommends keeping an eye on 2 years/10 years inverted yield curve, which is one of signals that most economists use to measure the likelihood of recession in the future. Maybank suggests investors to follow
1) will the trade war continue into the second half of this year?
2) fed interest rate movement.

Investment Theme
Maybank estimates the SET index to swing in a range of 1,630 +/- points (unclear on trade war issue). Maybank recommends domestic play stocks.

Big Issue
EA announced its investment in Taiwan-based Zept (developer and designer of EV powertrain system).

Stock Pick and Trading Idea
With the index staying at an area of 1600 +/- points, for risk takers, wait to buy domestic play stocks like CPALL (Target Price at THB 86), and CPN (Target Price at THB 87).

Technical View
Being around 1620, no clear movement: The SET index declined to stay at around the neckline 1620 again. In the near term, if it slips through the support 1620, it has a chance to switch to downtrend again. The next supports are 1600 and 1580.
For low-risk takers, wait until the index firmly closes above 1620, then you can buy stocks for speculation. But if you can take risk, consider buying stocks at supports 1600-1610. If it holds, accumulate stocks for a brief rebound trading. Stop loss immediately if it dips below 1600.
Investment strategy
1) With stocks, if rebounds intraday, take profit at resistances to reduce portfolio. But if dips below 1600, stop loss.
2) Without stocks, For low-risk takers, wait until the index firmly closes above 1620, then you can buy stocks for speculation.

Maybank sets a support line at 1600 points and 1610 points while setting a resistance line at 1630 points and 1640 points.

Keep an Eye On
1) US to report 1Q19 GDP on May 30 and China reports PMI Manufacturing. China raises tariffs on import goods from US worth USD 60 billion.
2) Parliament to vote for Prime Minister during May 31-June 9.