Daily Strategy for Investors on February 6, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on February 6, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

1) The situation of the virus spread is likely to be good. (Data from Changjiang newspaper of China), the report stated the research team, which is a group of leading scientists in China, invented a new strain of coronavirus antiviral drugs. Initial test results have shown that the drug can inhibit the new strain of the coronavirus in tissue culture testing at the cellular level by taking the time to develop the vaccine from 2 – 3 years to be only 14 days, AWS believes that it will be a positive sentiment for the shares in the aviation business sector. AWS still chooses AOT (TP Bt84.00) as a top pick.

2) US politics eased after the US leaders escaped from withdrawal after the US Senate (Republican Party of the US leader voted with 52 to 48 votes, convicted him to be acquitted of abuse of power, and voted 53 to 47 votes, allowing him to be freed for obstruction of Congress.

3) Crude oil prices recovered in response with the situation of the coronavirus outbreak that has started to have a positive factor. Previously, crude oil prices were under pressure from expectations that if the protracted situation would affect the demand of crude oil in 2020 about 3 million barrels per day. However, following the attitude of the OPEC group that will hold a special meeting. The market expects to see production cuts by 0.5 – 1 million barrels per day. AWS has a positive view on PTTEP (TP Bt147.00) and PTT (TP Bt52.00).

4) The MPC has a unanimous resolution which cut the interest rate by 0.25% to 1.0% (formerly 1.25%), mainly because the Thai economy in 2020 is likely to have lower than expected growth from the outbreak of the coronavirus, including ineffective fiscal tools due to the delay in 2020 Budget Act, including drought.

5) The economy stimulus policy in the country began to affect confidence in investing in the Thai stock market, especially, the consumer groups, hotels and aviation-related businesses.

6) Issues in the country that must be followed, the resolution of the Constitutional Court regarding the Budget Act for 2020 enacted correctly according to the Constitution or not on 7 Feb 2020. AWS looked at  3 possibilities: (1) In the worst case, the court has voided the whole act (2) In the base case, the court has resolved to re-pass some sections, and (3) The best case, the court decided to lose only the point that are inserted in the card instead which the voting result approve 253 to 0 votes (abstained 196 votes), so it would make Budget Act for 2020 to become effective.

Today, AWS expects the SET will be within the frame of 1,523-1,550 points. (Support: 1,531, 1,523 and 1,516 points/ Resistance: 1,543, 1,548 and 1,555 points)

 

Theme Investment 

1) Accelerate the disbursement of the government budget in 2020. We choose CK (TP Bt22.00), SEAFCO (TP Bt7.30), CPALL (TP Bt94.00), KKP (TP Bt80.00).

2) Government stimulus measures, AOT (TP Bt84.00), CPALL (TP Bt94.00) and HMPRO (TP Bt19.00).

3) Global trade has eased and Thai baht depreciates. AWS chooses HANA (TP Bt39.00), TU (TP Bt18.40) and CPF (TP Bt33.00).

4) High dividend yield and defensive stock. AWS chooses KKP (TP Bt80.00) and GPSC (TP Bt97.00).