Daily Strategy for Investors on October 20, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on October 20, 2020, indicating the essential events in the stock market as follows: 

 

Investment Ideas:

The overall investment today – AWS expects the SET Index today (20 Oct) to have no positive factors to support the recovery even during the past 5 business days, the SET Index dropped 64.68 points (-5.08%) due to negative domestic and international factors, especially the situation of the ongoing domestic gathering. 

 

The government declared a serious emergency in Bangkok, effective on 15 Oct, while foreign factors despite the positive signs of Brexit, uncertainty remains from the new round of stimulus measures in the U.S. and the global situation of COVID-19, especially in Europe that intensifies which depresses the economic recovery while China reported 3Q20 GDP growth in the second quarter, it is still lower than expected. 

 

For investment strategy, AWS still recommends reducing your investment portfolio to reduce the risk of stock market volatility. AWS recommends investing only in stocks with positive factors, including expected 3Q20 earnings growth stocks, including BEM, TU, CPF, HANA, KCE, ICHI, WICE and SAPPE, and stocks that benefit from government stimulus measures based on AWS investment theme.

 

The IMF sent a negative signal on the overall picture of the stock market – the stock market has rallied significantly, especially the U.S. stock market during the severe economic crisis from the COVID-19 outbreak, in contrast to the weak to negative overall picture of the real economy, the IMF has signaled that in the coming months the stock market may sharply drop, if the COVID-19 crisis persists and the economy recovers more slowly than expected.

 

The IMF said that by 2020, emerging market economies and developing countries are expected to shrink 3.3% but in some countries, for instance, India will shrink by more than -10%, while the U.S. economy will shrink -4.3%, French economy, Italian economy and the Spanish economy will shrink more than -10%, so the global economic recovery is still uncertain. 

 

Especially during the coronavirus which continued to spread. Although, the IMF has urged governments in many countries to use economic stimulus measures to prevent inequality in income distribution, but nowadays the public debt of many countries, especially in developed countries, in 2021 it will reach 125% of GDP, while emerging economies average 65% of GDP, although interest rates are very low and the economic recovery in 2021 will help the liquidity of each country but still considered a risk.

 

Technical View – Today, AWS expects the SET Index to move between 1,190-1,225 with the recommended stocks are SAT, SVI and SGP.

 

Theme Investment 

1) Benefit from a the government measures (Shop Dee Mee Kuen, Kon La Krung and Shop Dee Mee Kuen, Kon La Krung) (Short term trading 1-3 months) – BEM, MINT, WORK, VGI, PLANB, CRC, DCC, BJC, CPALl, JMART, COM7, HMPRO, MAKRO, MTC, KTC, OSP and M

2) Laggard stocks (Short term trading 1 month) – BAM, BDMS, BEM, CPALL, GPSC, MTC and WHA

3) Dividend Play (Middle term investing 6-12 months) – KKP, TISCO, QH, LH, SC, ORI, NOBLE, DIF, INTUCH, HANA, SCCC, EASTW, TTW,

4) Long-term cumulative shares (DCA) (Investing more than 1 year) – ADVANC, AOT, BDMS, BEM, CPALL, DIF and PTT