Maybank Kim Eng Securities has made an analysis for the trading session on May 23, 2019, stating on The SET Thursday experienced a selloff as in line with the regional markets, driven by selling pressure on SCC and global play stocks TOP, PTTGC and ESSO.
The index closed at 1,609.7 points (-17.1 points) with a trading value of THB 47 billion, (THB 50 billion the previous day). Foreign investors net sold Thai shares by THB1.5b, institutional investors net bought by THB 864 million. There were net short on SET50 index future by 12,114 contracts.
Investment Theme: Pressure on global play stocks if US-China to start tech-war
The global stock markets are being pressured by key economic data reports for 1Q19, the US-China trade war (MSCI Emerging market -5.6%) that affecting exports sector. The situation is likely to get worse after the US raising tariffs to 25% on USD 200 billion worth of imported goods.
For Thailand, there is a high chance the exports to continue growing negatively (apart from being hurt by trade war, it is still pressured by the high base of 11% in 2Q18).
The latest situation, Maybank found that both sides are trying to start tech-war through banning on import/export and/or trade partners like Google, Huawei, Rare earth, Panasonic, Sharp etc. Despite no official confirmation, it seems like there is no signal of negotiation and there is no update on the 12th meeting between US president Trump and China’s Xi Jinping. If the tech war actually starts, Maybank forecasts that the countries with high proportion of exports of technology products like South Korea, Taiwan, will be hurt badly. And the global play sectors would be pressured continuously, especially in commodity sector.
Given the SET lacking of positive catalysts and uncertainties of the trade war that may escalate to the tech war, Maybank estimates the SET index to swing in a range of 1,585 – 1,655 points.
Brent dropped 4.3% to USD 67.9/bbl. FTI reported auto exports growth of -8% YoY in April, a drop of 0.23% for 4M19.
Stock Pick and Trading Idea
Given the aforementioned foreign factors pressuring the investment sentiment, low-risk takers should halt your investment to wait for the clarity on the trade talks and Thailand’s government forming. When things get clearer, recommend gradually accumulate domestic play stocks led by CPALL (Target Price at THB 86) and AEONTS (Consensus Target Price at THB 216).
SET fluctuates, if dips below 1620, more downside: The SET index managed to hold in the morning session, before hitting by strong selling pressure in the afternoon on energy, retail and petchem sectors. The index closed below the neckline 1620 again. Coupled with the MACD indicator being in a negative signal.
In the near term, the downside will open more. It is likely to weaken to retest the support 1600. And if it fails to hold, it may continue slipping to retest the support 1580 and 1560. But given the market is fluctuating, if it rebounds, Maybank sees it as a chance to take profit.
1) Investors with stocks, if holds above 1600, stop loss. Or if rebounds intraday, take profit to reduce portfolio.
2) Without stocks, Since it dipped below 1620, wait & see until the index starts to form a base and stop sliding.
Maybank sets a support line at 1580 points and 1600 points while setting a resistance line at 1620 points and 1640 points
Keep an Eyes On
House of Representatives opens on May 24-25 and select the speaker of the House.