Maybank Kim Eng Securities has made an analysis for the trading session on May 15, 2019, stating that the SET yesterday moved in a tight range driven by selling pressure on CENTEL on MSCI index issue and BEAUTY for its significant drop in earnings. However, buying pressure was seen on PTG and CHG.
The index closed at 1,633.8 points (-6.2 points) with a trading value of THB 53 billion, (THB 40 billion the previous day). Foreign investors net sold Thai shares by THB 2.7 billion, institutional investors net bought by THB 854 million. There were net Short on SET50 index future by 9,206 contracts.
Investment Theme: Global stock markets swing on trade talks progress/eyes on Middle East situation
In the near term, the SET is likely to move in a range of 1,620-1,655 points, awaiting the clarity on the US-China trade talks. As of now, both sides have escalated tensions by raising tariffs on increased limits of imported goods. US raised tariffs to 25% on USD 200 billion worth of goods, while China on USD 60 billion.
Maybank finds that the most important factor is the impact on the global trade will continue for how long. Several organizations, led by IMF, World Bank have previously forecast that the global economy should recover in 2H19 better than 1H19. So, if the 12th round of trade talks or the G20 summit in Japan do not see some progress, Maybank believes that there is a higher chance the global GDP growth forecast to be revised down, especially for the emerging markets.
The impact to Thailand, currently, GDP forecast is at 3.6%, with downside remains if the exports fail to recover in 2Q19, (-3.6% in 1Q19, +2.2% for the whole year). This has limited upside in the medium term.
Another key factor to watch is the tension in the Middle East after the US sanction on Iran, leading several countries cancelling importing oil from the country. That has caused Iran unsatisfied. Recently, there was a terrorist attack on two oil ships on the coast of the UAE. No-one claims for their responsibility now. As a result, the US has sent its troops to post in the area. What to follow is if the Hormuz was to be closed, this may give a mild positive sentiment to crude oil prices while it may pressure on the geopolitical issue.
This week, SET should swing in a range of 1,620-1,655 points. For high-risk takers, trading buy on PTTEP, CPALL, GPSC (capital increase).
1) HM the King endorses senators.
2) Parliament to open on May 22.
Stock Pick & Trading Idea
1) Given the aforementioned foreign factors pressuring the investment sentiment, low-risk takers should halt your investment to wait for clarity.
2) For high-risk takers, accumulate PTTEP, (THB150+8 from Murphy). 2Q19 earnings are forecast to improve QoQ alongside the Dubai crude oil price QTD rising 11% QoQ while gas price steady QoQ. Sales volume should increase by 3-4% QoQ, mainly from South Bongkot project readies to resume operation after the maintenance shutdown.
The index should not slip through 1620 in the near term, otherwise, the downside will open more: The index opened with a gap and moved sideways downward all day. Despite there was a rebound intraday, it just a weak one. In the near term, if it holds above 1629 during the day, there may be a brief rebound intraday as the Modified Stochastic indicator has approached the oversold zone. If it rebounds, take profit to reduce portfolio as the index is likely to form a reversal double top pattern.
1) Investors with stocks, if dips below 1629, stop loss. If it rebounds, take profit to reduce portfolio.
2) Without stocks, wait&see until the trend is clear or strong rebound.
Maybank sets a support line at 1620 points and 1629 points while setting a resistance line at 1645 points and 1660 points
Keep An Eye On
1) The Democrat party to select leader and committees.