KGI Recommends “Buy on Dip,” Expecting SET to Pull Back in Early Jan. amid Covid Outbreak

KGI Securities has given a “Buy on Dip” strategy, giving inflows in the emerging market in Asia still amid hopes for COVID-19 vaccines coming to key countries including Thailand, while maintaining its calculation for the market downside level of 1,400.

 

KGI stated that in December 2020, the SET Index posted a high level of fluctuation, notably in the latter half of the month with the outbreak of local COVID-19 infections. On the positive side, the market still stayed at a relatively high level until the end of 2020 as the government decided not to impose a full-scaled lockdown, easing investors concerns about the economic consequences.

 

The latest COVID-19 crisis is likely to pull down the SET Index in early January, and KGI maintained its calculation for the market downside level of 1,400 points, based on 18.2x PE on 2021 EPS at 77.0, which effectively floored the SET Index during December 21-22, 2020 when the initial outbreak in Samut Sakhon province was reported. This assumes a full-scale lockdown does not take place in Bangkok.

Meanwhile, the bigger picture on EM Asian inflows remains amid hopes for COVID-19 vaccines coming to key countries including Thailand by mid-2021. Therefore, KGI advocated a buy on dip strategy and maintained its 1Q21 SET Index target of 1,590.