Daily Strategy for Investors on July 23, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on July 23, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

Investment Overview Today  – The stock market has new negative factors from both the domestic and oversea, from (1) The falling crude oil prices after the reserves increase in opposite directions from the analyst expectation. (2) The conflict between the U.S. and China is getting stronger (3) The concerns about Thailand which has the risk of being posted on the list of intervening countries with the U.S. Treasury, which are factors to pressure the overall investment since yesterday afternoon (22 July), and AWS believed to be factors to pressure the overall investment today.

In addition, the issues worth following are the progress of the new stimulus measures from Thailand and the U.S., including the Federal Reserve’s Policy Committee meeting (FOMC) in the next week (28-29 July).  

 

The crude oil prices are down which reflects the weak fundamentals – Lastly, the crude oil contract closed down after the U.S. Department of Energy’s Energy Information Administration (EIA) revealed that the U.S. crude oil reserves increased by 4.9mn barrels last week. (Ending 17 July) which is opposite of the analysts that expected a decrease of 1.9mn barrels. In addition, the EIA report states that the crude oil reserves in Kuching, Oklahoma (US crude oil delivery futures) increased 1.4 mn barrels.

 

The international politics start worrying after the U.S. ordered to close the Chinese consulate in Houston – The Washington government officially informing the Beijing government that China has to close the Consulate General in Houston in Texas within 72 hours from the date of official receipt. Causing a lot of dissatisfaction with China.

From this issue, it will increase the weight of the conflict after previously, the U.S. and China have many conflicts since the trade war, includes the conflicts about technology leadership, intervene in Hong Kong which the case of the People’s Republic of China Vote through the draft of the National Security Act to be applied to Hong Kong, and the U.S. accused of China is the cause of the spread including the release of the COVID-19.

 

Thailand had the risk in the U.S. Treasury Money List – A report from UBS Group AG and Goldman Sachs states that Thailand has the opportunity to list countries that must be monitored for currency intervention with factors that will make that country is there a chance to be caught in the surveillance account of currency intervention, consisting of (1) Whether the current account is in excess of 2% of GDP? (2) The country’s trade balance is in excess of USD20.0bn in 4 quarters consecutively or not and (3) Buying U.S. money or bonds with the value exceeding the amount of 2% of the country’s GDP during the 6-12 months or not? From these criteria, Thailand meets 2 of 3 the criteria in 2019 so that countries monitor the condition of currency intervention.

However, the Governor of the Bank of Thailand confirmed that there was no currency intervention in order to give Thailand an advantage in exports in such cases, apart from Thailand, there may be Switzerland and Taiwan too (Source: Brandinside.asia and BoT)

    

Technical View – Today, AWS expects the SET Index to move between 1,349 -1,373 points. (Support at 1,349 1,340 and 1,324 points and resistance at 1,365 1,373 and 1,390 points). The recommended stocks are OSP, CPF, CBG, PTTGC and BCPG.

 

Theme Investment

1)The stock which obtains the benefit from economic stimulus measures, the economic stimulus measure in the 1st phase – CPALL, HMPRO, BJC, OSP, CBG, TTW and MTC, the tourist stimulus measures – AOT, AAV, ERW and MINT, the government budgeting measures – CK, BEM, STEC, SEAFCO, PYLON and TASCO

2)Stocks that benefit from entering the rainy season – BCPG, BGRIM, CKP, GPSC and EASTW

3)Dividend Play – KKP, TISCO, QH, LH, ORI, NOBLE, DIF, INTUCH, HANA, EASTW, TTW, EGCO and RATCH

4)Long-term cumulative shares (DCA) – ADVANC, AOT, BDMS, BEM, CPALL, DIF and HMPRO