Daily Strategy for Investors on July 30, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on July 30, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

Investment Overview Today – AWS expects the SET Index today is likely to recover due to the repurchase of shares in the energy sector and the banking sector that had a lot of selling pressure yesterday (29 July) due to concerns over the overall economy. This is partly a result of a positive view on the Fed President’s statement. However, AWS sees the positive factors as short-term support only. The risk still exists from (1) The expected 2Q20 GDP of the U.S., which is expected to be as negative as 34%QoQ, will return to pressure the market and (2) Uncertainty of the COVID-19 situation. The Fed’s statement last night (29 July) stated that the economic recovery will mainly depend on the pandemic of the virus.

 

Today’s investment strategy, AWS recommends short-term speculation on stocks in the energy and banking sectors which are PTT, PTTEP, PTTGC, BBL, KBANK, and SCB, as well as stocks in the sector that are expected strong 2Q20 earnings which are CPF, TU, OSP, TASCO, STA, STGT, COM7, PTG, ICHI and JMT.

 

The Monetary Policy Committee (FOMC) meeting last night (29 July), the meeting has a unanimous resolution which still maintain the short-term interest rates at 0.00% – 0.25% as expected and confirming that the interest rates will remain at 0.00% – 0.25% as well as the Fed ready to use all the tools that the Fed has to support the U.S. economy until it recovered from the effects of the outbreak of the COVID-19, achieve the Fed’s goal of fully hiring and maintain price stability. The Fed will continue to hold bonds under the quantitative easing (QE) policy, according to the Fed’s policy to buy US government bonds of USD80bn per month and buy mortgage-backed debt securities (MBS) in the amount of USD40.0bn per month in order to stabilize the financial market which Fed will continue to buy back bonds until the end of March 2021.

 

The long-term economic recovery still depends on the COVID-19 situation – According to the Fed’s statement last night (29 July), the economic recovery which will depend mainly on the spread of the COVID-19 epidemic. “Economy’s path will depend significantly on the course of the virus” or, in other words, the economic recovery which does not depend on financial or fiscal tools, but will depend on the outbreak of COVID-19 whether it can be controlled or not. However, the Fed is ready to use all the tools that the Fed has to support the U.S. economy until it recovered from the effects of the outbreak of the COVID-19.

 

Investors still need to follow up on a new round of stimulus measures in the U.S. – The market continues to weigh the conflict between Republicans and Democrats about the details of the mitigation measures from Covid-19 in the new round with the budget of USD1.0 trillion which will affect the issuance of new stimulus measures. The latest situation, the Democrats and the White House are negotiating about the details of the new round of stimulus measures which includes the extension of the unemployment aid program that will expire at the end of July 2020.

 

The U.S. economic data scheduled for release this week – The number of weekly jobless claims, Gross Domestic Product (GDP) (preliminary estimate) for 2Q20, The Personal Consumption Price Index (PCE) in June and The Consumer Confident in July from the University of Michigan

 

Technical View – Today, AWS expects the SET Index to move between 1,329 – 1,346 points. (Support at 1,334 1,329 and 1,321 points and resistance at 1,341 1,346 and 1,354 points). The recommended stocks are HANA, PTG, COM7, CRC and OSP.