Stocks in Asia Edge Higher as Oil Rebounds, Analyst Expects SET Index to Remain Volatile

Stocks in Asia edged higher on Monday amid rising U.S. bond yield and a recovery in oil prices after a plummet last week.

 

As of 9:35 local time in Thailand on Monday, Nikkei rose 1.09%, SSEC increased 0.35%, HSI advanced 0.73%, ASX200 gained 0.10% and Kospi hiked 0.40%.

Last Friday, SET Index closed at 1,500.51 points, decreased 10.52 points or 0.70% with a trading value of 90.5 billion baht.

In the morning trading session in Asia, WTI rose $0.38/bbl or 0.64% to $59.62/bbl, while Brent Crude increased $0.61/bbl or 0.97% to $63.52/bbl.

 

Asia Wealth Securities (AWS) expected the SET this week (22-25 Feb) to move in a range of 1,474-1,536 points. The security company expected the stock market to remain volatile, especially at the end of the week, there will be no impact from the MSCI portfolios, including domestic issues to watch: progress on vaccines will be able to come on schedule (24 Feb) or not and the Thai trade balance report (import and export on 23 Feb).

AWS still believed that a rebound in crude oil prices will cause a buyback for energy stocks in a short-term for speculative manner.

For investment strategy, AWSstill recommended investing in a speculative manner in stocks that still have an upside in fundamentals and increase cash holding to reduce the risk from market fluctuation.

 

The outlook for Thai economy in 2021 of the Economic and Social Development Board (NESDB) believes that it will recover, expect 2021 GDP will return to a 2.5% -3.5% expansion, a gradual expansion after 2020 with a 6.1% contraction of Thai economy, along with guidance on the government’s need to focus on macroeconomic management, especially export-driving, government spending and investment, preparation of control epidemic and prevention of the return of a severe epidemic in the country, monitoring and preparing for risks from fluctuations in the global economic and financial systems and preparing for exposure to foreign tourists.

However, the economic expansion forecast was reduced from the previous forecast from economic risks and the second round of the epidemic of COVID-19.

 

In addition, AWS stated that WTI crude oil prices this morning recovered from last week. WTI crude contract for March delivery closed at USD59.24 per barrel, down USD1.28 (-2.1%) partly due to the operating situation of oil refineries in the state of Texas began to unfold which reduced concerns about the U.S. crude oil supply to rise.

However, the recovery in crude oil prices remains under pressure from Iran that it will increase oil output to 1 million barrels per day if the U.S. does not agree to lift the sanctions. This may result in more crude oil in the market. AWS believed the price of crude oil this week will continue to fluctuate.

 

Core Investment

1) Global Play (Trading within 1 month) – PTT, PTTEP, TOP, PTTGC and SCC

2) Green energy stocks (Trading within 3-6 months) – GPSC, EGCO, GULF, BGRIM, BPP, BCPG, EA and ACE

3) Expectations for the vaccine and increased stimulus measures (Trading for 3-6 months) – BBL, KKP, BEM, CPF, TU, M, OSP, CPALL, HMPRO, CRC and CHG

4) Dividend Play (Middle-term trading 6-12 months) – SC, LH, QH, KKP, TISCO, RATCH, DIF, INTUCH, EASTW and TTW

5) Long term accumulative stocks (DCA) (Long-term trading over 1 year) – AOT, BEM, ADVANC, WHA, LH, CPALL, CPF, BDMS, HMPRO, BBL and KTB