Stocks in Asia Trade Mixed as the Analyst Cautious Investors on Trading Energy Stocks

Stocks in Asia traded mixed on Tuesday after a gain in the European and U.S. stock markets to start the week amid rising oil prices and an unstable U.S. 10-year bond yield that moved ups and downs between late 1.5% to 1.60%.

 

As of 9:42 local time in Thailand on Tuesday, Nikkei rose 0.32%, SSEC dropped 0.86%, HSI gained 0.81%, ASX 200 increased 0.37% and Kospi fell 1.35%.

Yesterday, SET Index closed at 1,543.76 points, decreased 0.35 points or 0.02% with a trading value of 108 billion baht.

 

Asia Wealth Securities (AWS) expected the SET this week (8-12 Mar) to move within the range of 1,528-1,560 points. The SET index is likely to continue volatility following the volatility in the direction of bond yield recovery, pressuring the SET index and regional stock markets yesterday afternoon (8 Mar) and the decline in crude oil prices after the attack on oil terminals in Saudi Arabia does not affect the supply of crude oil, but it will affect the price of stocks in the energy and petrochemical sectors.

This leads us to recommend taking profit, suggesting a follow-up to the EIA, which is about to release a short-term energy outlook on 9 Mar, the ECB meeting (11 Mar). Market Consensus expects to see the release of measures to control the acceleration of bond yield and measures to help those affected by COVID-19, as well as inject money into the market continuously. This includes the FOMC meeting (16-17 Mar) to look at the Fed’s stance on the trend of rising inflation as a result of the stimulus and an increase in U.S. bond yields.

For investment strategy, AWS introduced a gradual take profit of the stocks AWS suggested earlier to reduce the risk of volatility in the short term, including valuation with limited upside.

 

AWS stated that WTI crude oil for April delivery closed at USD65.05 a barrel, down USD1.04 (-1.6%) as this attack on Saudi oil terminals did not directly affect oil fields. Therefore, it does not affect the overall oil supply, also the oil prices are affected by an increase in government bond yields which is a factor that depresses crude oil prices.

Despite short-term fundamentals, crude oil prices will be boosted by OPEC+ consensus to stabilize production levels, including the Saudi Continued to reduce production capacity of 1.0mn bars per day for another month, but the price of stocks in the energy sector that has increased until the current upside is limited, as well as global oil prices which are likely to come back to be under pressure again as OPEC+ plans to increase oil production by 1.5mn barrels per day in April. From these points, AWS recommended investors to be careful when investing in energy stocks.

 

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