Asia Wealth Securities (AWS) released an analysis for the trading session on August 20, 2020, indicating the essential events in the stock market as follows:
Investment Overview Today – AWS expects that today (20 Aug) the SET Index has a chance to recover in a narrow range as a technical rebound after yesterday (19 Aug) dropped 21.44 points (-1.61%), a larger decline than the regional stock markets since the COVID-19 cases were found in the country after 14 days of quarantine and the results of a small CCSA meeting resolved to extend the period of enforcement of the Emergency Decree to curb the COVID-19 situation in Thailand for another month at the end of September 2020, it caused a strong sell-off in the aviation, hotel and energy sector due to concerned that the situation would lead to the lockdown measures again. However, recovery remains limited by concerns over the risk factors above. In addition to the release of the Fed’s latest FOMC minutes, it maintains a negative view of the economy as a result of COVID-19.
Minutes of the last Fed meeting have a negative perspective on the U.S. economy overview: The Federal Reserve released the minutes of the Federal Reserve’s Monetary Policy Committee (FOMC) meeting on 28-29 July 2020, where the committee unanimously maintained the policy rate at 0% – 0.25% and began the talk of an adjustment to the long-term policy framework. In addition, using the yield curve target measure may not be appropriate for the current situation. The committee also had a negative view for the expansion of the U.S. economy based on the risks of the COVID-19 pandemic. But began to see the economic activity and employment recovering over the past month, despite the low level compared to the end of 2019. While the economic recovery trend depends on the development of the COVID-19 epidemic which is still highly uncertain.
The price of crude oil recovered slightly after crude oil reserves reported which dropped less than expected – the U.S. Government Energy Information Administration (EIA) reported that the U.S. crude oil reserves last week dropped 1.6 million barrels. (Ending Aug. 14) which was lower than analysts had previously expected a decline of 2.7 million barrels, while oil reserves at Kuching, Oklahoma, where the U.S. crude futures were lowered down 607,000 barrels which consistent with the information from the American Petroleum Institute (API), a group of the U.S. oil industry that previously reported that the U.S. crude oil reserves fell 4.2 million barrels.
At the JMMC meeting, disclosed that the demand for crude oil will return to normal levels in 4Q20 – The JMMC submeeting of OPEC+ identified that the trend of crude oil demand will recover to near normal levels within 4Q20, while production cuts plan of OPEC+ received good cooperation which previously, OPEC+ resolved to cut production by 7.7 million barrels per day. It is effective from August until the end of 2020.
Key economic data which will report today – China will be reported the 1-year and 5-year of LPR rates which expected to be 3.85% for the 1-year LPR and the 5-year LPR at 4.65%, the German will report the German Producer Price Index (German PPI) for July (expected to drop 1.6%YoY, but up 0.2%MoM) and the U.S. will be released the Manufacturing Index from the Philadelphia Federal Reserve (Philadelphia Fed Manufacturing Index) in July (expected to be 21 points) and the Weekly Initial Jobless Claims.
Technical View – Today, AWS expects the SET Index to move between 1,284 – 1,326 points. (Support at 1,297 1,284 and 1,266 points and resistance at 1,314 1,326 and 1,345 points). The recommended stocks are PTG, COM7, TU, BCH and QH.
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