Maybank Kim Eng Securities has made an analysis for the trading session on April 29, 2019, stating on SET last Friday faced a selling pressure in Energy sector lead by PTT, PTTEP, TOP and ICT which are DTAC, ADVANC.
The index closed at 1,667.1 points (-6.2 points) with a trading value of THB 40 billion, (THB 37 billion the previous day). Foreign investors switched to buy Thai shares by THB 40 million, institutional investors net sold by THB 1,722 million. There were net Short on SET50 index future by 7,532 contracts.
Investment Theme: Positive view on US-China trade negotiations, SET to swing in a range
This week, key factors include progress of trade negotiations between the US and China. US representative Robert Lighthizer is set to fly to talk with Liu He on April 30. Initially, Maybank has a positive view on this meeting and begin to see 2 positive signals, namely
1) The US trade deficit against China trade fell for four consecutive months, partly due to the rise of Chinese imports from the United States.
2) Xi Jinping addressed at the Belt and Road opening speech as he will encourage foreign investors to invest more withholding more shares while putting stricter measures for intellectual property issue, which is one of the important issues that the United States has always demanded 9 months ago.
After this meeting, the Chinese side will travel to the United States on May 8, before officially summarizing all the results. If this actually happens, Maybank assesses the stock market to respond positively and recommend 2 sectors expected to benefit directly and indirectly, ie 1) Logistic stocks like PSL, III (waiting after 1Q19 earnings). This week, Election commission of Thailand (EC) is expected to announce a calculation of party-list. Maybank expects 2 outcomes which are 1) there will be 27 parties in House. 2) There will be 16 Parties in House. Meanwhile, Maybank expects SET to swing in a range of 1,655-1,680 to wait for a result on 9th May.
Investment theme in April:
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%. HOLD PTTEP, BEM, and BJC.
1) Brent declined to 71.2USD/Barrel
2) Baht gained to 31.9
Stock Pick and Trading Idea
Gradually Accumulate BEM, target price at THB 12.00. The share price YTD is 15% laggard vs BTS as it waits for the progress of the expressway concession renewal. Maybank believes the issue should be finalized in the next few months. Maybank has positive view on this issue. Recently, new electric trains (Blue Line Extension) have arrived Thailand and prepare to test run before it starts operation officially in 3Q19. It will fully operate in 1Q20, expecting passengers to rise by 45-50% to 550k trips/day.
Index likely to retrace and sideway at 1655 (EMA200 Day): After the index is stuck at resistance and sideway at neckline around 1680 for 6 consecutive days, the index has started to break down short-term sideway support around 1665-1670 along with the stochastic crossing down from the overbought area. So Maybank believes that index will drop to supporting area 1655 (EMA200 Day). If index not break down 1655, it still be in the uptrend. But if wrong, the index will change to sideway in the area 1630-1655
1) Investors with stocks, If it dips below 1665 recommend to lock profit or rebound to test 1675 +/- recommend to take profit.
2) Without stocks, Waiting and see. If not dips 1655, index will sideways for a while.
Maybank sets a support line at 1640 points and 1655 points while setting a resistance line at 1675 points and 1690 points.
Keep An Eye on
1) FOMC on Apr 26.
2) Q1-GDP on 30 Apr / 1st May is TH-holiday.