Asia Wealth Securities (AWS) released an analysis for the trading session on August 31, 2020, indicating the essential events in the stock market as follows:
Investment Overview Today – AWS expects the SET Index this week (31 Aug – 3 Sep) to remain volatile despite positive sentiment from (1) Easing monetary policy in addition to announcing important monetary policy changes of the Fed chair. The Bank of England (BoE) is still preparing to adopt a looser monetary policy “policy mix” and (2) The signing of an agreement to mitigate the economic impact of the U.S. leader from COVID-19 worth USD1.3tn after four weeks of the emergency unemployment subsidy program expired. However, foreign risk factors to be monitored include (1) A new round of conflicts between the U.S. and China, after the week before China fired missiles at the U.S. in the South China Sea in response after the U.S. used a spy plane to watch Chinese naval maneuvers as the U.S. responded with sanctions on 24 Chinese companies that support the Chinese military and (2) The second wave of COVID-19 situation in Europe after the number of infections in Europe has been reported to rise again at the higher rate. AWS expects the SET Index this week to move in a range of 1,303-1,358 points.
BoE ready to take additional monetary easing – The Governor of the Bank of England (BoE) is ready to implement more easing monetary policy by using several easing monetary policies “policy mix”, including the possibility of a negative interest rate, if necessary, includes the acquisition of assets under the additional Quantitative Easing (QE) measures. The BoE previously lowered its policy interest rate to a low of 0.1% and making a QE of GBP745.0bn is a clear move like the Fed chair’s major monetary policy announcement before.
The U.S. economic data was better than expected, but Europe’s poor signal -The U.S. Department of Commerce reported that The consumer’s personal spending in the U.S. rose 1.9%MoM in July which was better than expected 1.5%, but increased at a slower rate compared to 6.2%MoM in June. While the Personal expenses rose 0.4% in July, better from June’s reported 1.1% drop in prices and the personal consumption expenditures (PCE) up 0.3%MoM in July and an increase of 1.0%YoY. While the Core PCE index (The Fed is used as a measure of inflation but it is highly volatile because excluding food and energy category) in July rose 0.3%MoM which increased 1.3%YoY. For European sides, the German Market Research Institute (GfK) released a survey showing that Germany’s consumer confidence forecast index for September contracted 1.8 after August contracted 0.2% lower than previously expected to return 0.5% growth in September. While France’s INSEE Institute reported that France’s gross domestic product (GDP) contracted 13.8% in 2Q20, an increase in contraction from a 5.9% contraction of 1Q20.
Today’s key economic statistics report – Japan will reports the Industrial Production Index in July (expected to increase 5.8%MoM) / China will report the Services in August, the Manufacturing Purchasing Managers Index in August (expected to expand at 51.2) and the combined purchase managers index in August / Thailand will reports the Exports and Import Value, the Trade Balance for July, the Private Investment Index for July, the Current Account in USD in July and the Private Consumption Index (Private Consumption) July / Europe will report the German CPI in August (expected to increase 0.1%YoY, but down 0.2%MoM).
Technical View – Today, AWS expects the SET Index to move between 1,316 – 1,334 points. (Support at 1,316 1,309 and 1,298 points and resistance at 1,326 1,334 and 1,344 points). The recommended stocks are CENTEL, BCP, TU, SCB and TMB.
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