Asia Wealth Securities (AWS) released an analysis for the trading session on August 13, 2020, indicating the essential events in the stock market as follows:
Investment Overview Today – AWS sees positive factors supporting the SET Index after yesterday (12 Aug), there was no trading, but regional stock markets continued to increase, making the SET Index in the short-term attractive to invest in from valuation, together with positive factors from economic reports of both the U.S. and Europe, progress in vaccine development, including recovering crude oil prices, confidence in the overall increase.
These lead AWS to believe that the market will return to increase the weight of investing in risky assets. However, from a medium to long-term perspective, AWS still believes the market will remain volatile.
AWS investment strategy, AWS selects stocks that are expected to deliver outstanding performance such as CPF, OSP, STA, STGT, COM7 and PTG, and recommend short-term speculation in the energy sector such as PTTEP and PTTGC as top picks.
Crude oil prices recovered in the short-term, suggest only speculative stocks in the energy sector. – Crude oil prices rose last night after the U.S. Energy Information Administration (EIA) reported a 4.5 million barrel drop in U.S. crude oil reserves (ended 7 Aug), decreased more than expected and in line with the report of the American Petroleum Institute (API), the U.S. oil industry indicating U.S. crude reserves fell 4.4 million barrels. However, crude oil reserves at Kuching, Oklahoma, where U.S. crude futures were up 1.3 million barrels.
Economic data from the U.S. and Europe expanded well – The U.S. Department of Labor reported the Consumer Price Index (CPI) for May rose 0.6%MoM and 1.0%YoY which the increase in the CPI in July was driven by government easing of lockdown measures after the previous economy was shut down to stem the spread of COVID-19. While the Eurostats reported that Eurozone industrial production expanded for the second consecutive month which the Manufacturing production grew 9.1% in June, lower than expected, but continued to expand from 12.3% in May.
A new round of stimulus to the U.S. must still be monitored – The issue of negotiations of the U.S. negotiations to remedy the economic impact of the COVID-19 outbreak remains to be monitored. Most recently, the majority leader of the U.S. Senate calls for the White House and Democrats to Negotiations started again about the bill after negotiations failed last week due to differing opinions between Democrats and the Republican Party (government) by U.S. economists express concerns that the U.S. economy is at risk of entering a recession, if the White House and Congress cannot reach an agreement on the bill.
Today’s key economic data – Japan will release its key economic data which is Producer Price Index (PPI) in July (expected down 1.1% YoY, but up 0.3% MoM) / Europe will release the most important economic numbers which is Consumer Price Index of Germany in July (Expected down 0.1%YoY and 0.5MoM)/ the U.S. will announce key economic figures which are the Federal Budget Balance in July (expected to drop USD 863.0bn) and the weekly Initial Jobless Claims.
Technical View – Today, AWS expects the SET Index to move between 1,317 – 1,348 points. (Support at 1,332 1,327 and 1,321 points and resistance at 1,337 1,342 and 1,348 points). The recommended stocks are ADVANC, QH, AOT, MINT and BEM.
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