Asia Wealth Securities (AWS) released an analysis for the trading session on September 1, 2020, indicating the essential events in the stock market as follows:
Investment Overview Today – AWS expects a chance of recovery today (1 Sep), but for the short-term only. Yesterday, it fell more than 12.65 points (-0.96%) due to MSCI rebalancing and concerns over the overall economy for the remainder of 2020 to 2021 after the 2020 tourist arrivals is lower than the BoT estimation, which will affect GDP estimates due to the proportion of revenue from the tourism sector, including related businesses accounted for 20% of GDP, as well as some major economic reports in many countries start signaling negatively. As a result, the overall view of the SET Index for the whole week remained highly volatile.
The BoT is preparing to cut its 2020 economic forecast in September after the number of tourists is lower than the target – the Bank of Thailand (BoT) estimates that the overall economy in 2020, if considering the overall monthly economy, there will be a better than expected recovery in June – July, especially government spending in both of federal and state-owned expenditures grew by as much as 50% and 17.2%, respectively. But there is still high uncertainty, especially the tourism sector which previously the BOT estimated that there would be around 8 million foreign tourists in 2020, but from the current situation, it was expected that the best case would be to have only 6.7 million tourists, below than expected 1.3 million people. From this factor, it will affect Thailand’s GDP in 2020 approximately 0.5% from the previously estimated 2020 economic figure projected to shrink 8.1% by the proportion of revenue from the tourism sector, including related businesses accounted for 20% of Thai GD. While in 2021, it is still highly uncertain as the BoT estimates the number of foreign tourists at 16 million, higher than the Ministry of Tourism and Sports which estimated at 12 million people, which if not as expected, there is a high risk that the Thai economy in 2021 will expand below the target estimated by the BoT of 5%. Also, the risks to the Thai economy for the rest of the year 2020 to 2021 lie in the resumption of the coronavirus epidemic and private investment, including the labor market remains weak and fragile.
Japanese economic confidence has declined. Meanwhile, India reported a sharp contraction in 2Q20 GDP – Japan’s Cabinet Office reported Japanese consumer confidence in August on Wednesday (31 Aug), the first drop in four months on concerns about the second wave of COVID-19 situation. While India reported a massive 23.9% contraction in GDP in 2Q20, a contraction than expected (18.3% forecast) from 1Q20 growth of 3.1%, but it still has a positive factor from the expectation of U.S. nonfarm payrolls will increase by 1.255 million in August, report on Friday.
Today’s key economic statistics – Japan will report the GDP in 2Q20 (expected -0.7%QoQ), the unemployment rate in July (expected to increase at 3.0%) and the manufacturing purchasing managers index in August / China will report the Caixin Institute’s Purchasing Managers Index in August (expected to expand at 52.7)/ European will report the Manufacturing Purchasing Managers’ Index in August (expected to expand at 51.7) and the consumer price index (CPI) in August (expected to increase 0.2%YoY) and the unemployment rate in July (expected to increase at 8.0%)/ German will report the retail sales index in July (expected to decrease 3.3%MoM), the manufacturing purchasing managers’ index (PMI) in August (expected to expand to 53.0), the Unemployment Change in August (expected increased 53,000 jobs) and the German Unemployment Rate in August (expected to increase to 6.4 %)/ The British will report the Manufacturing Purchasing Managers Index in August (expected to grow at 55.3) / The U.S. will report the Manufacturing PMI in August and the ISM Manufacturing Purchasing Managers Index in August (expected to contract at 54.0).
Technical View – Today, AWS expects the SET Index to move between 1,293 – 1,317 points. (Support at 1,302 1,293 and 1,278 points and resistance at 1,317 1,326 and 1,342 points). The recommended stocks are SGP, DOHOME, BCH, TOA and TQM.
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