Asia Wealth Securities (AWS) released an analysis for the trading session on August 7, 2020, indicating the essential events in the stock market as follows:
Investment Overview Today – AWS expects the SET Index to return to a sideway movement in a narrow frame, waiting for new positive factors to support investment which still needs to follow the new round of economic stimulus measures both domestic and abroad. While the risk of uncertainty in the world trade situation and the tighter conflicts of the U.S. and China, including the COVID-19 situation that pressured the SET Index and the regional stock markets. In the medium to long-term strategy, AWS will continue to focus on domestic play and defensive stocks such as HMPRO, BJC, CBG, TTW, EASTW, BCPG, CKP, GPSC, DIF, INTUCH and EGCO, as well as stocks that are expected to have strong 2Q20 earnings results, including ASIAN, CPF, TU, OSP, TASCO, STA, STGT, COM7 and PTG.
The trade war is still a risk, pressuring overall investment – According to the Phase 1 trade agreement, Chinese imports from the U.S. was still below target, particularly, energy purchases from the U.S. account for only 5% of the Phase 1 trade agreements target of USD25.3bn in the 6M20, partly due to the COVID-19 pandemic and the increasing tension situation between China and the U.S. by the information of the Chinese Customs Department. China imported crude oil, liquefied natural gas (LNG) and other U.S. energy products of USD1.29bn during 6M20.
BoE remains the interest rates and QE measures – The Bank of England still maintain the policy rate at 0.10% at yesterday’s meeting (6 August) and maintain the purchase limit of bonds under the quantitative easing (QE) at GBP745.0bn (USD981.0bn) which the BoE also signaled that will not tighten monetary policy until the inflation rate moves to sustainable levels while still monitoring the situation and ready to adjust the monetary policy as necessary. Moreover, The BoE also disclosed that the UK unemployment rate could rise to 7.5% at the end of 2020, the BoE’s comments indicate that the recovery of the British economy will depend on (1) the COVID-19 epidemic and ( 2) Measures taken to protect the public health system.
The Ministry of Commerce of Thailand reported the inflation rate in July which improved – The office of Trade Policy and Strategy (OTP) reported the consumer price index (Headline inflation) in July 2020 decreased by 0.98% (improving for 2 consecutive months) from a significant negative in April 20 (-2.99%) in May 20 (-3.44%) and June 20 (-1.57%). The trend of inflation will remain stable at this level which is considered consistent with the direction of the domestic economy and total inflation (7M20 / Jan – Jul 20) decreased 1.1%. While the core inflation (Excluding fresh food and energy) in July, increased 0.39% so 7M20 increased 0.34%.
The U.S. economic stimulus measures have taken another step Forward – The negotiation between Congress and the White House on a new round of stimulus packages, It is also an issue that investors are still concerned about and AWS expects to see an agreement to reach out to treat people affected by the COVID-19 outbreak.
The first-time unemployment claims in the U.S. are lower than expected –the U.S. Department of Labor reported the number of applicants for first-time jobless benefits totaled 1.186 million in the past week. It was lower than analysts had previously expected 1.42 million and were the lowest level since the coronavirus outbreak in the U.S., while investors continue to monitor the U.S. non-farm employment numbers which the Ministry of Labor will report today (7 August), with the market expecting an increase of 1.36 million jobs in July and expects the unemployment rate to drop to 10.7%.
Technical View – Today, AWS expects the SET Index to move between 1,325 – 1,342 points. (Support at 1,329 1,325 and 1,316 points and resistance at 1,337 1,342 and 1,350 points). The recommended stocks are ORI, CHG, SGP, PTTGC and CPALL
1) Benefit from the stimulus package – CPALL, HMPRO, BJC, OSP, CBG, TTW and MTC (Phase 1 stimulus package), AOT, AAV, BA, ERW and MINT (Tourism stimulus package), CK, BEM, STEC, SEAFCO, PYLON and TASCO (disbursement of government budget)
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