Analyst Expects a Technical Rebound for SET Index as Most Asia Stocks Edge Higher

Stocks in Asia traded mostly higher on Tuesday amid rising oil prices that surged beyond $66 per barrel as U.S. output is set for a slow return due to the heavy storm in Texas.

 

As of 9:43 local time in Thailand, SSEC rose 0.09%, HSI gained 0.56%, ASX200 increased 0.55%, Kospi dropped 0.49%, while the Japanese stock market closed for a holiday.

Yesterday,  SET Index closed at 1,478.14 points, decreased 22.37 points or 1.49% with a trading value of 89.8 billion baht. The decrease was due to profit-taking to seek a higher return in the U.S. yields.

 

Asia Wealth Securities (AWS) expected the SET today (23 Feb) to move within a range of 1,463-1,495 points. There is still a risk from inflation recovery concerns. This was reflected in the increase in bond yields, especially the 10-year U.S. treasury bond yield, which is the reference rate for setting global bond prices, including loan interest rates (Impacting consumer purchasing power and interest and capital cost).

However, AWS expected to see a technical rebound in favor of buying back stocks in the energy sector and banking sector on a short-term speculative aspect from positive factors. For investment strategy, AWS still 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.

 

WTI crude for March delivery closed at USD61.49 a barrel, up USD2.25 (+3.8%) due to concerns about the Polar Vortex situation which will affect oil production and gas in the U.S. for longer than expected. This was partly due to a shortage of electricity in the state of Texas which affects about 20% of the U.S. refining capacity and affected the production of 4.0mn barrels of crude oil per day and natural gas production of 2.1 cubic feet per day.

From these issues, it will still be a positive factor for investment in energy stocks. However, the volatile overview of investments, AWS only gave speculation weight.

The issue of crude oil price risk to be monitored is in (1) the U.S. Energy Information Administration (EIA) Weekly Crude Oil Reserves report on Wednesday (24 Feb) at 10:30 PM Thai time which AWS expected crude oil reserves to increase from the refining problem in the U.S. and (2) OPEC+ meeting on 4 Mar by Market Consensus expects the meeting to resolve measures to reduce oil production cuts after April after crude oil prices recover.

 

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