Asia Wealth Securities (AWS) released an analysis for the trading session on March 24, 2020, indicating the essential events in the stock market as follows:
1) The Dow stock market rose by 495.64 points (+2.39%). WTI crude oil prices rose by 48 cents (+2%) and gold prices fell by USD27.4 (-1.65%).
2) Positive investment sentiment comes from oversea factors after the US can reach an agreement to heal those affected by COVID-19 at USD2tn, accounting for 10% of GDP, boosting confidence in the US economy and the world economy.
3) This week, there are still important US economic statistics that needs to follow, including weekly unemployment benefit and 4Q19 GDP.
4) The number of people infected COVID-19 in the US, Spain, and Italy remained worrisome. AWS believes that if the rate increases, it will be a limiting factor in the global stock market recovery while in the domestic increased not as much as expected.
5) The European Union is considering the use of funds in the European Stability Mechanism (ESM) to reduce the impact of COVID-19 in the EU. It is expected that the amount will be at EUR410bn.
6) Bank of Thailand (BOT) led by the Macroeconomic Department, Monetary Policy Group, decided to maintain the policy interest rate at 0.75%, revealing that the risk of the COVID-19 virus affected financial markets, capital markets, and the overall economy of countries around the world, including Thailand. In addition, MPC will decrease GDP estimate in 2020 by 5.3% (formerly expected to be 2.3%), but it is expected to expand in 2021 at the rate of 3%. Although the MPC’s policy interest rate was maintained in line with our expectation, it needs to be careful of negative surprise from the market because most consensus estimates that it will decrease by 0.25%.
7) AWS still has a positive view on the Thai stock market after yesterday (25 March) increased 46.19 points (+4.47%), partly because of positive factors from increased confidence in the liquidity in the system after the Bank of Thailand issued aid measures, the clarity of the Emergency Decree. Public administration in emergency situations still do not affect economic activities within the country as previously a concern.
AWS looks at stocks in the Global play to be benefited from increased confidence, but AWS still weighs only short-term investment due to the risk from COVID-19 pandemic. Our main strategy is to focus on selective investments in stocks that benefit from the COVID-19 situation (Stock antivirus …. COVID-19), especially Bangkok measures that closed the risk areas for 22 days (22 March – 12 April), which makes stocks in the theme more interesting, including stocks in the high dividend group according to our theme investment.
Today, AWS expects the SET to be within the range of 1,054 – 1,126 points (with support at 1,077, 1,054 and 1,028 points and resistance levels at 1,103 1,126 and 1,152 points).
1) Antiviral stocks . COVID -19, AWS chooses TU (TP Bt18.40) GFPT (TP Bt12.00) CPF (TP Bt33.00) TFG*(TP Bt5.35) BJC*(TP Bt48.00) CPALL (TP Bt85.00) and TQM*(TP Bt69.00).
2) Accelerate the disbursement of the government budget in 2020. AWS chooses CK (TP Bt22.00), SEAFCO (TP Bt7.30), WHA (TP Bt4.20), and KKP (TP Bt80.00).
3) Government stimulus measures, AWS chooses AOT (TP Bt79.00) CPALL (TP Bt85.00) BEM (TP Bt12.50) and HMPRO (TP Bt19.00).
4) Interest rates cut. AWS chooses ORI (TP Bt9.00), SPALI (TP Bt20.00), MTC (TP Bt73.00), KKP (TP Bt80.00), and TISCO (TP Bt112.00).
5) High Dividend, AWS chooses KKP (Div.Yld.11.3%), QH (Div.Yld. 8.7%), and DIF (Div.Yld 8.2%), TISCO (Div.Yld. 7.9%) BAFS (Div.Yld. 5.6%) RATCH (Div.Yld. 5.5%) and ADVANC (Div.Yld. 4.8%) *IAA Consensus.