Maybank Kim Eng Securities has made an analysis for the trading session on June 13, 2019, stating that the SET on Wednesday moved within a tight range, driven by buying pressure on SCB, construction STEC and STPI. However, BEC was continued sold.
The index closed at 1,671.1 points (+0.7 points) with a trading value of THB44 billion (THB50 billion the previous day). Foreign investors continued to net buy Thai shares by THB768 million. Institutional investors net sold by THB201 million. There were net long on SET50 index future by 4,979 contracts.
Investment Theme: US-China trade war/ FED meeting
The US-China trade war impact continues to take its toll on the stock markets and the key economic data for both countries such as GDP, PMI, inflation, currency, trade surplus and many more. It is found that both were pressured by more impact in the past quarter.
However, the US side seems to have more advantage over the Chinese side in terms of its stronger economy and more stable stock markets. Maybank hopes thing should get clearer at the G20 Summit on June 28-29.
Initially, Maybank has a neutral view and not recommend raising investment weight on global plays stocks. Another important factor to watch this week is the FOMC meeting on June 18-19. Basically, Maybank estimates that the US Fed should maintain its interest rate at 2.25-2.50%. Investors are recommend keeping updating the Fed chair Powell speaks after the meeting. Maybank believes he should continue his dovish stance and there is a chance of interest rate cut in 2H19. However, Maybank finds that the markets have absorbed this issue already.
In summary, Maybank forecasts that big caps may swing in a range to wait for the clarity of both issues, together with the SET index. The mid cap stocks should become more attractive.
Maybank estimates the SET index this week to swing in a range of 1,645-1670 points. Maybank still recommends accumulate PTTEP (global play) and speculate domestic play stocks led by WORK and CPALL.
China reported auto sales slumped 16.4% in May, continued falling for 11 months consecutively.
Stock Pick and Trading Idea
HOLD domestic plays stocks led by CPALL, WORK and S. Gradually accumulate BEM at support level THB10.80 and THB11.
Worst case is the delay of the concession negotiation by 1-3 months. The concession will expire in 1Q20 so the time for negotiation is limited. Meanwhile, the Administrative Court and Arbitral Tribunal have ruled that EXAT to pay damages to BEM for some cases. The total debt is THB60 billion (according to Prachachart Thurakij). Recently, BEM and EXAT have negotiated for some cases such as the concession of the expressway phase 2 from 37 years to 30 years. Maybank will updates information further.
Gradually take profit or if dips below the low 1665, lock profit: The SET index started to lack of continued strong buying pressure. It managed to only move sideways. The index is now struggling at the resistance level of the ascending triangle at around 1675 area. This was coupled with the Stochastic indicator approaching the oversold zone, and the crude oil price tumbled last night, Maybank therefore expects that the index may correct in the near term. The next supports are 1660 and 1653. If it dips below the low 1665, lock profit.
1) With stocks, if rebounds, take profit at resistance 1675-1680. But if dips below 1665, gradually lock the profit.
2) Without stocks, if weakens to test the support 1660 and 1653, accumulate stocks for trading.
Maybank sets a support line at 1653 points and 1660 points while setting a resistance line at 1675 and 1690 points
Keep an Eye On
1) OPEC meeting June 25-26. G20 Summit June 28-29.
2) Government forming should complete within the next few weeks.