Asia Wealth Securities (AWS) released an analysis for the trading session on June 1, 2020, indicating the essential events in the stock market as follows:
Investment Overview Today – This week, AWS expects the SET Index to move sideway or side-way up to wait for new positive factors to support investment. However, the economic statistics report in May, including the crude oil price are still strong which will continue to be an investment supporting factors. Risk factors from foreign countries still have to follow the conflict between the U.S. and China, both from trade issues and international politics.
The Sell in May did not exist in the year of COVID-19 pandemic – The SET Index in May increased 3.2% for the third year in 10 years. The SET Index in May gave negative returns of average 2.7% per month, only May 2014 and May 2016 provided positive returns, with May 2020 having a positive sentiment from (1) the crude oil price increased by more than 45% (2) government stimulus measures (3) Thai easing lockdown measures due to the improved number of people infected with COVID-19 (4) Thai baht appreciation, recently, Thai baht at the end of May was at Bt31.8 per USD, appreciating by 3.9% and (5) buying from SSFx.
The market is still reflective of the overall investment outlook – The VIX index is still volatile at a low level but there are still risk factors due to the uncertainty of the conflict between the U.S. and China from trade problems and international politics. This is reflected by the gold contract which continued to increase by 3.8% in the previous month and the yield on 2-year and the decline in 10-year U.S. government bonds. The latest are at 0.16% and 0.65% respectively.
This week, keep an eye on the May PMI of many countries, as well as the ECB meeting – This week must follow the manufacturing and service PMI statistics report in May by many counties, including China, England, the US and Germany, which the Consensus has projected to recover from April, the European Central Bank meeting on 4 June (stimulus measures issue), while next week will have an OPEC meeting between 9-10 June (production cuts issue).
Oil prices are supported by resolutions to reduce production capacity may extend the time, including the OPEC+ meeting that may move in faster – AWS sees that the issue will be a positive factor supporting crude oil prices to stand at a high level which the latest Dubai crude oil price is USD34.7 per barrel, up 45% from the end of April as a result of production cuts following OPEC+ with a recent decline of 9.7 million barrels per day (May-June), and decreased by 7.7 million barrels per day from July to the end of 2020. Also, the latest possibility is to extend production cuts of 9.7 million barrels per day until the end of September or the December (extended for 3 or 6 months) and it will have the meeting as soon as within this week (originally 9-10 June).
Technical View – This week, AWS expects the SET index to move in a range of 1,331 – 1,391 points and for today, AWS expects the SET index to move in a range of 1,337 – 1,356 points (with support at 1,337, 1,330 and 1,317 points and resistance levels at 1,349 1,356 and 1,369 points). The recommended stocks are SAWAD, CPALL, DTAC, BJC, and BDMS.
1)Recovery of crude oil price – PTTEP, PTT, TOP, BCP, SPRC and PTTGC
2)Accelerate the disbursement of government investment budget- CK, STEC, SEAFCO, PYLON and TASCO
3)Stocks that benefit from entering rainy season – BCPG, BGRIM, CKP, GPSC and EASTW
4)Stocks that benefit from government measure – ADVANC, BTS, BEM, CPF, CPALL, BJC, CRC, CPN, PLANB, HMPRO, OSP and CBG
5)Long-term cumulative shares (DCA) – ADVANC, AOT, BDMS, BEM, CPALL, DIF and HMPRO
6)SSFx target stocks – PTT, PTTEP, BJC, CPALL, AOT, GULF, EGCO, INTUCH, ADVANC, BAM and BDMS