Daily Strategy for Investors on July 22, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on July 22, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

Investment Overview Today – SET remains volatile, although yesterday (21 July) will recover strongly in the afternoon due to buying energy and petrochemical stocks, including positive feedback on the progress in vaccine development and the European Union (EU) reached an agreement to establish a rehabilitation fund of EUR750bn to help the EU economy from the effects of the COVID- 19. However, the risk of the number of people infected with COVID-19 is still increasing, especially in the U.S. Therefore, the investment strategy is still focusing on domestic stocks and stocks with specific positive factors according to the theme investment, especially CPF, which AWS expects to have an outstanding performance in 2Q20.

 

The crude oil prices recovered after increased confidence in the economy – Positive factors supporting the crude oil prices from the weakening in the U.S. dollar and increased confidence in the economy, from the case of the development of a vaccine against COVID-19 and the EU reaching an agreement to establish an economic recovery fund of EUR750bn, as factors supporting crude oil prices.

 

The EU reached an agreement to establish an economic recovery budget of EUR750bn – Since last May, the European Commission (EC) proposed the establishment of the rehabilitation fund which consists of loans and grants for member countries of the European Union (EU) affected by the COVID-19 pandemic. Most recently, leaders from 27 EU countries have reached an agreement to establish a budget of EUR750bn to help heal the EU economy from the effects of the COVID-19 pandemic. 

However, the meeting takes longer to consider than usual because there are some countries (Netherlands, Denmark, Sweden and Austria). There are still conflicts regarding the conditions for receiving assistance from the funds, including the allocation of financial aid and overseeing the use of funds by calling for a reduction in the amount of grants in the form of grants and for the countries that receive the loan, must promise about economic reform.

 

The number of people infected with COVID-19 is still worrisome – The report from Worldometers says the total number of people infected worldwide is 15 million, while the U.S. is still the country with the highest number of people infected per day. Most recently, the number of people infected in the U.S. has increased by 67 thousand people, the U.S. is still a country with the number of people infected and deaths account for 1 in 4 of the world. AWS still looks to be a factor limiting the stock market upside despite the development of vaccines is a short-term investment stimulation factor

 

CPF so strong after yesterday, CPP (CPF subsidiary) reported an outstanding performance in 1H20 – on 21 July 2020, CPP (CPF holds 52.24%) informed the Hong Kong Stock Exchange that the company expects a net profit of approximately USD310-330mn in the 1H20, up 278%YoY, as a result of rising pork prices in Vietnam in 1H20 so it enhance the profit margins, including the decreased in the changes in fair value of biological assets in Vietnam. Previously, AWS estimated that CPF will have a 2Q20 net profit of Bt6.4bn up 56%YoY and 5%QoQ. (For more information; In the Earnings Preview on 13 July and Company Update on 22 July)

 

Technical View – Today, AWS expects the SET Index to move between 1,370 -1,394 points. (Support at 1,375 1,370 and 1,362 points and resistance at 1,381 1,386 and 1,394 points). The recommended stocks are PTT, COM7, MINT, BGRIM and TOP.

 

Theme Investment

1)The stock which obtains the benefit from economic stimulus measures, the economic stimulus measure in the 1st phase – CPALL, HMPRO, BJC, OSP, CBG, TTW and MTC, the tourist stimulus measures – AOT, AAV, ERW and MINT, the government budgeting measures – CK, BEM, STEC, SEAFCO, PYLON and TASCO

2)Stocks that benefit from entering the rainy season – BCPG, BGRIM, CKP, GPSC and EASTW

3)Dividend Play – KKP, TISCO, QH, LH, ORI, NOBLE, DIF, INTUCH, HANA, EASTW, TTW, EGCO and RATCH

4)Long-term cumulative shares (DCA) – ADVANC, AOT, BDMS, BEM, CPALL, DIF and HMPRO