Asia Wealth Securities (AWS) released an analysis for the trading session on August 21, 2020, indicating the essential events in the stock market as follows:
Investment Overview Today – AWS expects today the SET Index will continue to move within the sideway despite the good signal of the trade negotiations from the Chinese authorities after confirming and negotiating with the U.S. in line with the U.S. Trade Negotiation Working Group, but no sign has yet from the U.S. leader after being signed to cancel trade talks with China last weekend. While the U.S. economic statistics also reflected the overall impact of COVID-19. The SET Index declined over the past two days, totaling 33.32 points (-2.5%), negative response to increased risk factors from domestic political factors and in cases where people infected with COVID-19 after 14 days of quarantine, including foreign risk factors after the Fed opened the minutes of the latest FOMC meeting seeing the COVID-19 situation remains risk to the economic recovery, pressuring on confidence on the overall economy and raising concerns about the future demand for crude oil.
World trade issues are resolved in the short-term after China confirmed it is ready to negotiate a trade with the U.S. – From the previous issue of postponement of the U.S.-China trade talks to monitor progress on a trade deal in the past six months, recently, a Chinese Ministry of Commerce spokesman confirmed China is ready to negotiate with the U.S. to monitor the progress of the trade agreement in phase 1 that was agreed at the beginning of the year which is in line with the stance of the U.S. economic advisor, including the U.S. Trade Representatives that are still satisfied with the progress on the trade deal in the past. China has bought a lot of U.S. commodities, only agricultural products that China ordered less than expected. However, the opinion conflicts with the stance of the U.S. leaders that canceled trade talks with China last weekend and do not want to discuss with China during this time (Source: Bloomberg).
The latest U.S. economic report is weak, especially in the labor market – the U.S. Department of Labor revealed that the number of applicants for first-time jobless benefits was 1.106 million in the past week which is higher than analysts expected 923,000 people. In addition, the U.S. Federal Reserve (Fed), Philadelphia branch reported the Mid-Atlantic business conditions index fell to 17.2 in August from 24.1 in July and below analysts’ estimate of 21.0. While the Conference Board reported that the Leading Economic Index (LEI) rose 1.4% in July, increasing at a lower rate from May and June, which increased more than 3%.
The important economic data that will report today – Japan will report the National Core CPI for July (expected to drop 0.10%YoY), the Manufacturing purchasing managers’ index. (Manufacturing PMI) in August and the Services PMI of August. / Europe will be revealed the Manufacturing purchasing managers’ index (Manufacturing PMI) in August (expected to expand at 53.0), the Purchasing Managers Index (Services PMI) in August (Expected to expand at 54.0) and the Manufacturing Purchasing Manager Index from Markit (Markit Composite PMI) in August (Expected to grow at 54.7) / The U.S. will announce the Manufacturing purchasing managers’ index (Manufacturing PMI) in August (expected to expand at 51.5), the Purchasing Managers Index (Services PMI) for August, the Purchasing Managers Index (Markit Composite PMI) in August and Existing Home Sales in July (Expected to increase 5.1mn units).
Technical View – Today, AWS expects the SET Index to move between 1,287 – 1,308 points. (Support at 1,292 1,287 and 1,281 points and resistance at 1,297 1,302 and 1,308 points). The recommended stocks are SPALI, CPN, CRC, MAJOR and ORI.
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