Daily Strategy for Investors on April 2, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on April 2, 2019, stating that SET yesterday gained in the morning in line with the regional markets, driven by strong buying pressure on power plants EA, GULF, EGCO and ICT stocks DTAC and TRUE, including financial MTC, KTC and SAWAD.

The index closed at 1,644 points (+5.99 points) with a trading value of THB 44 billion, (THB 39 billion the previous day). Foreign investors switched to net sell Thai shares by THB 193 million, institutional investors net bought by THB 2.5 billion. There were net long on SET50 index future by 5,806 contracts.

 

Investment Theme
April investment strategy, an unclear political issue remains until May 9: The SET in the previous period was pressured by political issue, leading to QTD +4.7% gain, which is laggard compared to the stock markets in EM and the global stock markets that rose by 8-10%. From now to May 9, Maybank expects the political tension may start to cool down.

Given the fact that two major political parties capable of forming the government win the election with the numbers of MPs that come in close at about 245-255 seats, that depends on the Bhumjaithai party where its party leader stated that he will decide after May 9.

So, during this period of time, the stock market should be moving sideways as pressured by foreign factors that become mildly positive. That includes 1) the outcome of the trade talks between US-China, 2) Both the US and China together reported better than expected PMI figures. China reported Caixin PMI at 50.8, higher than expectations, a recovery in 4 months while the US reporting ISM at 55.3. Maybank has a mildly positive view on this issue. This is in line with Maybank’s previous view that recommended investors gradually accumulating the global plays stocks. However, Maybank suggests only short term speculation because some sectors may report weak 1Q19 earnings results.

 

2Q19 Investment Theme
The SET in April should swing in the uptrend channel with a range of 1,630-1,680 points. Recommend investors holding cash not less than 40%. BUY global palys stocks like PTTEP, BCP and HOLD BEM and CPALL.

 

Big Issue
The consumer price index was measured at 102.37 in March, up 0.41% month-on-month and 1.24% year-on-year, on rising prices of fresh foods and fuel, the Commerce Ministry announced.

 

Stock Pick & Trading Idea
Gradually accumulate stocks with 2 themes; sector expected to face limited impact from political factors led by retail BJC, giving a target price at ฿65.0/share and tourism SPA with a target price at ฿15.80/share and sectors with limited downside, recovering margin with attractive valuation led by BCP with a target price at ฿39.0/share and BCH with a target price at ฿20.0/share.

 

Technical View: If holds above 1640 support in the morning, likely to continue gaining to test 1656

The SET index opened with a gap and weakened in the afternoon driven by strong buying pressure on energy, property, ICT and retail sectors. However, selling pressure was seen on transport, petrochemical and banking sectors.

The index was able to break out the resistance 1645 but closed at the previous level. However, since Brent rose +2.3% last night, Maybank believes that if it can maintain above the support 1640 in the morning, it is likely to continue gaining. Recommend trading and considering selling pressure at resistance 1656.

 

Investment Strategy:
1) Investors with stocks, continue holding stocks. If rebounds intraday, consider selling pressure at resistance 1656. If fails to breakout, sell stocks for next trading cycle.
2) Without stocks, gradually buy stocks if weakens intraday to test supports 1640, only for a rebound trading at 1656.

 

Maybank sets a support line at 1630 points and 1640 points, while setting a resistance line at  1656 points and 1675 points.