Asia Wealth Securities (AWS) released an analysis for the trading session on September 2, 2020, indicating the essential events in the stock market as follows:
Investment Overview Today – AWS expects the SET Index today (2 Sep) to recover after declining more than 21.24 points (-1.6%) after responding short-term negative factors from MSCI Rebalancing, including the psychological impact after the deputy minister of finance resigned after working only 27 days (effective 2 Sep), while the short-term support came from the business confidence index in August and the better outlook for the next three months, including the COVID-19 situation that do not have additional negative factors. AWS sees that it will make the stock in Theme Investment (benefiting from a successful vaccine development in the near future) more interesting as well as a positive sentiment to energy and petrochemical stocks due to confidence in oil demand for the remainder of 2020 to 2021. An interesting issue today needs to be monitored stimulus measures to take care of the economy for the rest of the year 2020, focusing on short-term measures will be proposed by EESA today (2 Sep).
BoT’s debt restructuring measures for small retail debtors are positive rather than negative. AWS chooses BBL as the top picks – Previously (27 Aug 20), the BoT issued debt restructuring measures for small retail debtors with the debt consolidation method, which makes the home loan limit and unsecured loans totaling about Bt10-20bn (commercial banks, specialized financial institutions and non-commercial banks) can join the program from today to 31 December 2021. AWS views it as both a positive factor for business risk in terms of the bank’s bad debt provisioning, it is likely to be less than expected from the measure, but it is a negative factor for the profitability of the business. This will reduce the interest rate charged to the debtor, which will affect the effective interest rate (EIR) because the interest rate on which the debtor will drop. This equates to the current Minimum Retail Rate (MRR) of 5.75% – 8.80%, which AWS expects to have a negative short-term impact on the share price. This will be a negative factor for banks that have the most proportion of retail loans participating in the 1st phase loan assistance measures such as KTB, SCB and BAY. AWS chooses BBL (BUY; TP Bt150.00) as top picks since the retail debt proportion is low.
The Bank of Thailand reported business confidence index in August, improving MoM but still below the standard – Bank of Thailand (BoT) report revealed that Business Sentiment Index for August 2020 has increased for the fourth consecutive month to the 45.7 from improved confidence in almost all businesses, especially in the major manufacturing sectors such as machinery and equipment manufacturing, including the automotive manufacturing sector that has received positive factors from the promotion and the launch of new models in the past. While the business confidence index in the next 3 months continued to rise above 50 for the first time. This reflected confidence in the business trend to improve from the present, especially in terms of production and purchase orders, led by food and beverage manufacturers and automotive manufacturers, including electrical and equipment manufacturers and electronics equipment manufacturers. The index, which rose sharply in August, reflected the confidence of entrepreneurs in the manufacturing sector that recovered quite well. Non-manufacturing sector rose in almost all businesses as well, except construction groups.
The U.S. economic report and China is strong while Europe is still weak – The U.S. Supply Management Institute (ISM) survey report that the U.S. manufacturing index in August was 56.0 better than expected, the statistic increased from July at 54.2 and expanded for the third consecutive month reflecting the expansion from positive factors from the increase of new orders. This ISM report is in line with the IHS Markit report that the U.S. manufacturing PMI in August was 53.1, up from July. At 50.9. While the manufacturing PMI in China survey in August stood at 53.1, better than expected and increased from 52.7 in July, the largest expansion in 10 years. In the EU, the EU Statistics Office (Eurostats) reported the Eurozone unemployment rate in July rose to 7.9% from 7.7% in June due to the states resume lockdown measures to stem the spread of the COVID-19 virus which in addition to the rising unemployment rate. It also caused the euro zone’s final purchasing managers’ index (PMI) in August to drop to 51.7 from 51.8 in July and the inflation in August shrink 0.2%, down 0.4% compared to July.
Today’s key economic statistics report – The U.S will report the number of nonfarm employment changes from the ADP in August (Expected increased 2.25 million) and the weekly Crude Oil inventories report
Technical View – Today, AWS expects the SET Index to move between 1,293 – 1,314 points. (Support at 1,299 1,293 and 1,284 points and resistance at 1,307 1,314 and 1,323 points). The recommended stocks are RS, GULF, TKN, THANI and MAJOR.
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