Daily Strategy for Investors on March 21, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on March 21, 2019, stating that SET yesterday swung in a narrow range with a thin trading value. Strong buying pressure was seen on financial stocks KTC, SAWAD and MTC, including refinery BCP.

The index closed at 1,627.6 points (-2.4 points) with a trading value of THB 36 billion, (THB 38 billion the previous day). Foreign investors switched to net sell Thai shares by THB 1.4 billion, institutional investors net bought by THB 1.4 billion. There were net long on SET50 index future by 419 contracts.

 

Investment Theme
Yesterday, the Bank of Thailand’s monetary policy committee (MPC) voted 7:0 to hold its benchmark interest rate steady and cut its forecasts for economic growth to 3.8% (Maybank expected 3.8%) from 4.0% due to US-China trade war. Exports this year is also cut to 3.1% from 4.1% (consumption 3.9%, private investment 4.4%, govt investment 6.1%, exports 3%). Tourists numbers is slightly raised to 40.4 million. The Thai Baht slightly weakened to ฿31.78/USD after the announcement. Maybank has a neutral view on this issue.

Meanwhile, the US FED also held its benchmark interest rate at 2.25-2.50% as expected, GDP is cut to 2.1% from 2.3%. The likelihood of an interest rate hike for this year is cut from twice to zero. The Dotplot is also cut to 2.4% +/- for this year and 2.6% in 2020-2021 (rate hike once in 2020). Moreover, the balance sheet reduction was cut by half in bond to USD15b/month in May. This is in line with Maybank’s forecast citing that the US dollar and bond yield should face limited upside. This is positive to the investment sentiment in the emerging markets.

 

March Investment Theme
The SET in March should swing in a range of 1620-1680 points +/-. The market is expected high volatility in March due to political factors both domestic and global. Recommend hold cash no less than 40%. Focus on power plant (EGCO) mass transit (BEM), tourism (SPA), retail (CPALL) and PTTEP is a global play stock.

 

Big Issue
Tourism and Sports Ministry reported tourists number of 3.57 million, increase 0.17% YoY in Feb, Chinese tourists down to 1.05 million.

 

Stock Pick & Trading Idea
Maybank recommends BUY TU at a target price of ฿21.70/share (Upside 17%), strong 1Q19 earnings. Tuna price remains good at USD1,480-1,500/ton, so margin (%) should be strong. Shrimp business benefits from selling price adjustment and expand the market to products with a higher margin. Downside risk declined as it has allocated provision for the legal case of Chicken of the Sea and disclosed the loss-making salmon business in Scotland last year. The earnings for this year are expected at THB 5.9 billion (+12% YoY). Technically, if breaks 18-19, good to go.

 

Technical View
The SET index failed to continue to rebound as the buying pressure on the leasing and hospital stocks was defeated by the strong selling pressure on conmat, banking, and petrochemical stocks. But with the Brent crude oil sharply jumped by +1.32% last night, there may be a brief rebound. However, given a 60-minute chart remains a downtrend, Maybank recommends investors take profit when rebounds, selling stocks at the resistance and hold more cash. But if it dips below 1623, lock profit or stop loss.

 

Investment Strategy
1) Investors with stocks, If rebounds intraday, sell stocks to reduce portfolio at resistances. But if dips below 1623, lock profit or stop loss.
2) Without stocks, gradually buy stocks if weakens intraday, only for a rebound trading.

 

Maybank sets a support line at 1612 points and 1623 points, while setting a resistance line at  1640 points and 1660 points.

 

Keep an Eye on
1) EC considers Brexit extension
2) Thai election on Mar 24.