Asia Wealth Securities (AWS) released an analysis for the trading session on September 8, 2020, indicating the essential events in the stock market as follows:
Investment Overview Today – AWS expects the SET Index today (8 Sep) to drop in line with valuation after the SET Index closed on 4 and 7 Sep due to the substitution for Songkran Festival from the negative factors of (1) Domestic politics (2) Concerns about the overall economy after many countries reported their GDP in 2Q20 contracted more than expected. Today (8 Sep), Japan’s GDP (expected down 2.8%YoY) and European GDP (expected down 3.2%YoY) and (3) Declining crude oil prices reflected concern over the demand for crude oil for the rest of the year. AWS looks at these factors to put pressure on the overall stock trading today. While this week, the ECB meeting (9-10 Sep) follows the release of additional stimulus measures, including expectations that the monetary policy eased like the Fed before. Our investment strategy looks as an opportunity to accumulate. AWS continues to focus on stocks with positive factors based on our Theme Investment. AWS evaluated the SET Index this week (8-11 Sep) to move in a range of 1,285-1,329 points.
Crude oil price fluctuates strongly after worrying about the COVID-19 situation – AWS estimates that the short-term, crude oil prices were also negative due to (1) Cuts in GDP estimates for many countries after the 2Q20 GDP report was largely lower than expected and (2) The COVID-19 pandemic in some countries that are not yet controllable (India and Brazil), especially in India, where the daily increase of infected cases is a new record. This resulted in the total number of infected more than 27.5 million, negative sentiment on oil demand for the remainder of 2020, coupled with concerns over supply problems from OPEC+ resolutions to cut the production proportion from 9.7 million bpd to 7.7 million bpd from Aug to Dec 2020, and will reduce the proportion of the production to 5.7 million bpd during Jan-Apr 2021 is a factor to depressed crude oil prices. AWS weighs the Neutral in upstream stocks (PTT, PTTEP, and BANPU). As a strategic investment, AWS recommends gradually accumulating PTT and PTTEP when prices weaken. In the short-term, there are negative factors from lower crude oil prices, but in the medium term, there are positive factors from the 3Q20 earnings recovery (follow up Sector Update: Energy Sector on 8 Sep).
Australia’s latest 2Q20 GDP report strongly contracted. Singapore continues to lower its forecast – The Australian Bureau of Statistics reported a 7% contraction in 2Q20 GDP than expected of 5.9% and up from a 0.3% contraction of 1Q20 while Singapore downgraded its 2020 GDP forecast which is the third time. Recently, it is expected that 2020 GDP will shrink 6%. GDP in 3Q20 and 4Q20 will shrink 7.6% and 3.7% respectively, before recovering in 2021 at 5.5%.
Chinese customs report that the export growth rate in August rose 9.5%YoY, better than analysts had expected at 7.5% which the export to the U.S. Still growing strong partly because of waning concerns over the U.S.-China conflict, while the imports have begun to recover from the previous month but it continued to contract 2.1%, partly due to the U.S. agricultural import which still tends to increase continuously according to the Phase 1 trade deal with the U.S. (Source: Bloomberg)
Today’s key economic statistics report- Japan will report the July Household Spending Index (expected to rise 7.5%MoM, but down 7.5% YoY). The current account in July (expected surplus of 110 billion yen) and GDP for 2Q20 (expected down 0.7%QoQ and 2.8%YoY)/ Europe will report the GDP for 2Q20 (expected down 3.8%QoQ and 3.2%YoY), Germany will report the Goods Trade Balance in July (expected a surplus of GBP101billion), the Exports (Expected to increase 13.3%MoM) and the imports in July (Expected to increase 10.9%MoM).
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