Asia Wealth Securities (AWS) released an analysis for the trading session on August 27, 2020, indicating the essential events in the stock market as follows:
Investment Overview Today – AWS expects the SET Index today (27 Aug) to move in a side-way framework to wait and see the results of the U.S. Federal Reserve’s annual meeting (Fed), while conflicts between the U.S. and China will also limit the upside of the SET Index. However, for the medium term, AWS starts to see the valuation of the SET Index starting to laggard compared to regional stock markets. In addition, the yield of government bonds began to increase. It is a good time to gradually accumulate stocks. AWS continues to focus on positive factors, defensive stocks, and high dividend stocks based on its theme Investment.
Follow the “Jackson Hole” Conference beginning today – The Federal Reserve’s (Fed) Annual Meeting in Jackson Hole on 27-28 August, “Navigating the Decade Ahead: Implications for Monetary Policy”. An interesting issue lies in the Fed chair’s speech to show a vision of the Fed’s monetary policy and U.S. economic outlook. Earlier, the Federal Reserve released the minutes of the Federal Reserve’s Monetary Policy Committee (FOMC) meeting from 28-29 July. The Federal Reserve had a negative view for the expansion of the U.S. economy. However, the economic recovery trend depends on the development of the COVID-19 pandemic, which is still highly uncertain, leading to a review of the long-term policy framework adjustment and that the Yield Curve Target measure may not be appropriate for the current situation. Fed President Jerome Powell is scheduled to deliver a speech on 27 August 8.10 p.m. Thai time.
Crude oil prices increased in a limited frame, need to be wary of the sales force – A report by the U.S. Energy Information Administration (EIA) indicated a 4.7 million barrel drop in U.S. crude oil reserves last week. (Ended on 21 Aug) is the fifth consecutive week of decline and more than expected. While the situation of Hurricane Marco and Tropical Storm Laura in the Gulf of Mexico still impacts. However, the frame of crude oil price was limited due to concerns of growing demand for crude oil from the COVID-19 situation that began to spread in many countries that were previously controlled. AWS estimates the positive factors from rising crude oil prices. This reflected in the price of energy stocks a lot. Therefore, it needs to be careful about profit taking.
The conflict between the U.S. and China continues to pressure the overall investment – the conflict between the U.S. and China on both political and international trade issues from the latest issue in the South China Sea after China fired the missiles into disputed waters following the U.S. spy plane. Recently, the U.S. announced 24 more names into the trade ban process, including visa restrictions on certain groups of Chinese citizens. AWS looks negative on the overall investment picture.
Today’s key economic statistics report – the U.S. will report the GDP of 2Q20 (the market is expected to drop 32.5%QoQ), Pending Home Sales in July (expected to increase 1.5%MoM) and the Initial Jobless Claims.
Technical View – Today, AWS expects the SET Index to move between 1,315 – 1,332 points. (Support at 1,320 1,315 and 1,307 points and resistance at 1,327 1,332 and 1,340 points). The recommended stocks are SAWAD, RBF, TRUE, BTS and AWC.
1) Benefit from a successful vaccine development in the near future (Short term trading 1 month) – AOT, AAV, BA, ERW, M, CENTEL and MINT
2) Benefit according to the season (Short term trading 1-2 months) – BGRIM, CKP and GPSC
3) Benefit from the stimulus package (Short term trading 1-3 months) – CPALL, CRC, HMPRO, BJC, OSP, CBG, MTC, CK, BEM, SEAFCO, PYLON, TASCO, COM7 and WHA
4) Dividend Play (Middle term investing 6-12 months) – KKP, TISCO, QH, LH, ORI, NOBLE, DIF, INTUCH, HANA, EASTW, TTW, EGCO and RATCH
5) Long-term cumulative shares (DCA) (Investing more than 1 year) – ADVANC, AOT, BDMS, BEM, CPALL, DIF and PTT