Asia Wealth Securities (AWS) released an analysis for the trading session on September 9, 2020, indicating the essential events in the stock market as follows:
Investment Overview Today – AWS expects the SET Index today (9 Sep) to still have negative factors from abroad and lower crude oil prices pressured. Investors have increased their weight in safe haven assets like gold and bonds, leading to lower bond yields, with U.S.2Y at 0.141% and U.S.10Y at 0.669%.
AWS recommends investing in Dividend Play stocks based on our Theme Investment. Issues to watch out for are the ECB meeting (9-10 Sep), the market expected to see additional stimulus measures as well as expectations that the monetary policy is relaxed.
Crude oil prices plunged more than 7.6%, reflecting weak demand – AWS sees that the decline in crude oil prices from three factors: (1) Saudi Aramco’s further crude export price cut the Official Selling Price (OSP) of domestic crude is down USD1.5 per barrel in all quality crude oil.
From this point, it reflects the overall picture of oil demand in the weak in the Asian market. At present, the problem of oversupply supply causing major world producers to reduce their prices to maintain including taking market share.
(2) Oversupply, AWS believes that the price rebound in crude oil in the past 1-2 months. It was a positive response to the easing of lockdowns in many countries and positive sentiment to demand expectations to recover after the COVID-19 situation eased, but Demand’s recovery is currently limited by epidemic control measures.
As a result, the Demand’s recovery has limited factors. On the one hand, the global crude oil reserves fell less than OPEC previously estimated, and the OPEC + resolution cut the production cut from 9.7 million barrels per day to 7.7 million bpd (beginning Aug-Dec 20202) so it increases supply in the market and (3) Seasonal effect after the expiration of the Driving season in the U.S. causing the market to expect the rate of refining capacity in the US Will begin to decrease again.
2 Oversea issues pressures overall investment – (1) The growing conflict of the U.S. and China after the U.S. leadership announcing lower economic ties between the U.S. and China and preparing to take tariffs on the U.S. companies which create jobs abroad and they will prevent companies investing in China from receiving business contracts with the U.S. federal government, including providing tax benefits to ‘Made in America’ companies. While China is preparing to propose a plan of countermeasures.
(2) The British government is preparing to propose a bill which is at odds with the Brexit Withdrawal Agreement signed in January 2020, particularly in relation to government aid, including a special arrangement that is associated with Northern Ireland. (Northern Ireland businesses that export their merchandise to Great Britain do not have to provide documentation to showcase their merchandise which is different from the original agreement that required Northern Ireland to comply with EU customs rules).
In the case that trade agreement could not be reached, the British leaders has deadline for signing of the Brexit deal within 15 Oct 2020 or Britain is deemed unable to reach an agreement together with the European Union (Source: BoTSS)
Today’s key economic statistics report- China will report the consumer price index (CPI) in August (market expected to increase 2.4%YoY and 0.4%MoM) and the producer price index (PPI) in August (expected down 2.0%YoY) / the U.S. will report the weekly Crude Oil Inventories.
Technical View – Today, AWS expects the SET Index to move between 1,286 – 1,301 points. (Support at 1,290 1,286 and 1,277 points and resistance at 1,297 1,301 and 1,310 points). The recommended stocks are RBF, AWC, PLANB, BEC and THANI.
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