Daily Strategy for Investors on August 14, 2019

Maybank Kim Eng Securities has made an analysis of the trading session of August 14, 2019, stating that SET yesterday continued experiencing a selloff driven by selling pressure on big caps CPALL, AOT, PTTGC, SCC and financial stocks MTC and SAWAD.

The index closed at 1,620.6 points (-30.4 points) with a trading value of THB 64 billion (THB 59 billion the previous day). Foreign investors net sold Thai shares by THB3.395 billion. Institutional investors net sold by THB 838 million. There were net Short on SET50 index future by 13,744 contracts.

 

Stock Picks & Trading Idea
HANA (Consensus TP THB30): For high-risk takers, speculate HANA for short term as it posted 2Q19 earnings slightly higher than forecast at THB464m (+45%QoQ,-9%YoY). Sentimentally, it may benefit from USTR withdraws some types of goods led by mobile phones postponed to 15 Dec (from 1 Sept).

SABINA (TP THB36): The company posted a record high 2Q19 earnings at THB119m (+23%YoY, +25%QoQ), driven by strong sales of Seamless bra and online sales that strongly grew 35% YoY, resulting in margin rising over 200bps to 52.6%.

 

Investment Theme
USTR announces next steps on proposed 10% tariff on imports from China: The United States Trade Representative (USTR) yesterday announced the next steps in the process of imposing an additional tariff of 10% on approximately USD300b of Chinese imports.

Further, as part of USTR’s public comment and hearing process, it was determined that the tariff should be delayed to December 15 for certain articles. Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.

Initially, Maybank believes that Trump did not want impact on its citizen during Christmas as they may have to buy more expensive goods. Partly, to prevent an impact on his vote base and inflation Maybank believes. This move has partially helped ease trade war tensions.

Consequently, Dow Jones up +1.4%, Brent up +4% and gold dropped -2% last night. However, Maybank suggests investors keep following the trade talks over the telephone between two representatives Liu He and Lighthizer during the last week of August as there are some goods to be taxed by about USD110b. Keep an eye on China’s measures to counterattack US side by manipulating its Yuan this week.

After the SET index slipped through the key support level at 1,670, Maybank suggested those low-risk takers to halt their investment to wait & see the outcome of the trade talks and FED meeting in September and the outcome of CNY currency that may weaken to lower than 7.0 vs dollar. This may symbolize that China wants to have a trade talk again. The SET index may swing in a range of 1,630-1,670 points this week.

Maybank sets a support level at 1585, 1600 and a resistance level at 1630, 1645.

 

Big Issue
– Mongkolkit withdraws from the coalition
– Brent rose 4.1% to USD61

 

Keeps Eyes on
– China and Hong Kong dispute