Asia Wealth Securities (AWS) released an analysis for the trading session on August 17, 2020, indicating the essential events in the stock market as follows:
Investment Overview Today – AWS believes that today (17 Aug) the SET Index is still under pressure despite the SET Index recently dropping 19.64 points (-1.46%) on Friday (14 Aug), but during weekends and holidays, there are still many negative factors that continue to occur, particularly the U.S. and China postpone the phase 1 trade deal review date indefinitely, including the COVID-19 situation that many countries returning to take measures to lock down after a new round of infection has been found significantly increased and growing concerns from domestic political factors while today’s earnings results announcement is the last day. It is necessary to be cautious of profit taking as sell on fact of stocks in the sector were expected to have strong earnings before. While key meetings this week – The FOMC, JMMC meeting of OPEC+ and the Eurogroup Meetings that are unlikely to have positive surprises. The only investment factor to be monitored is progress on the new stimulus package (No.5) in the U.S., AWS expects the SET this week (17-21 August) to move between 1,315-1,360 points.
South Korea stock market is closed on the National Liberation Day of Korea.
COVID-19 situation came back to worry – During the past holidays, there were new cases of infection in many countries, especially in South Korea and New Zealand. New Zealand found a heavy pandemic in Auckland. New Zealand authorities recently announced the lockdown for 2 weeks.
Postponing negotiations to review the phase 1 trade deal indefinitely – the U.S. and China postpone the phase 1 trade deal review date indefinitely after an incompetent agreement originally expected to be reviewed on 15 Aug which the trade representatives of the U.S. and China agreed to postpone the phase 1 trade pact review date for reasons of impropriety, including the fact that China does not buy goods and services from the U.S. as much as promised. Therefore, postponement of the new negotiation round so that China still has time to comply with the agreements that have been made.
A new round of stimulus for the US will also be followed – the progress of the new stimulus package (No.5) of the U.S. after the two sides negotiated another deal last week and still cannot find a conclusion due to the Democrats propose to issue stimulus with a limit of more than USD3 trillion, while the White House wants to use only USD1tn.
Following the meeting of finance ministers of the Eurozone– The meeting of the Eurogroup Meeting on 17 August, the focus is on retaliatory measures against the EU’s import tariffs.
The important economic data which announced today – Japan will reveal GDP in 2Q20 (expected to contract 27.2%YoY and 7.6%QoQ), the Industrial Production Index in June (expected to drop 2.7%MoM). Thailand will report the GDP in 2Q20 (expected to contract 13.3%YoY and 11.4% QoQ).
The important issues which need to be monitored this week – Follow the U.S. Monetary Policy Committee (FOMC) meeting, which will take place 18-19 August which keep an eye out for signals from the Federal Reserve Chair (Fed), the Meetings of the Capacity Reduction Agreement (JMMC) of OPEC+ on 19 August (AWS has a negative view which believed that it is not the time for members to pass a resolution to increase the proportion of production cuts) and at the end of the week, following the purchasing managers’ index (PMI) of both the US and Eurozone sectors.
Technical View – Today, AWS expects the SET Index to move between 1,319 – 1,341 points. (Support at 1,319 1,311 and 1,297 points and resistance at 1,333 1,341 and 1,355 points). The recommended stocks are CHG, GLOBAL, ORI, HANA and TU.
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