SET Drops to Support Level at 1,560 as Negative Sentiments Overwhelm the Market

The Stock Exchange of Thailand Index (SET) dropped 3.40 points or 0.22% to 1,560.85 points as of 10:27 local time in Thailand with a trading value of 18 billion baht.

 

Asia Wealth Securities (AWS) expected the SET to move within the range of 1,550-1,582 points, stating that the SET index has a chance to decrease due to increased risk factors (1) political problems between the U.S. and China by the U.S. and the West issue sanctions on China regarding China’s human rights violation. The case of the Uighur Muslim minority in Xinjiang (Monitor the increased risk if raised to trade sanctions) (2) concerns over the lira crisis of Turkey will affect the currency of the Emerging Market and Frontier Market countries, especially those with a weak economic outlook and (3) a decline in crude oil prices from concerns over European countries enacting a new round of lockdown measures to control the spread of the COVID-19 virus which will affect economic activity and the demand for oil, including the German government announcing an extension of the lockdown measure by another one month, AWS viewed it as factors that depress the overall investment today.

For investment strategy, AWS still focused on holding cash in proportion not less than 50% and focused on investment strategies in the Selective style in stocks with specific positive factors. The weight is only short-term speculation to reduce the risk of market volatility.

 

WTI crude oil contract for May delivery closed at USD57.76 a barrel, down USd3.80 (-6.2%). AWS looked at three negative factors (1) concerns about the COVID-19 epidemic situation new wave in Europe (2) IEA cuts its 2021 crude demand forecast down from 2.5mn barrels per day, Also the view that during 2H21, the crude oil market will remain over supply and (3) Falling orders for crude oil from China by Angola which is Africa’s second largest oil producer and is China’s main crude trader. There was a drop in orders from China which reflects the weakness of the crude oil demand.

AWS had a negative outlook for energy and petrochemical stocks, but this is positive for TASCO, TOA, EPG, GULF, BGRIM, GPSC, OSP, BJC, BGC and CPALL which are stocks that benefit from the decline in crude oil prices.

 

Core Investment

1) Stocks which obtained the benefit from Thai Baht depreciation (Trading within 3-6 months) – HANA, KCE, TU, ASIAN, GFPT, CPF, STA, STGT, SAT, EPG, SMPC and MEGA

2) Stocks which obtained the benefit reopen country (Trading within 6-12 months) – AOT, AAV, BA, ERW, M, CRC, CPALL, CENTEl, MINT, BH, BDMS, SPA, MBK, NOBLE, WHA and AMATA

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

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