Asia Wealth Securities (AWS) released an analysis for the trading session on September 10, 2020, indicating the essential events in the stock market as follows:
Investment Overview Today – AWS expects the SET Index today (10 Sep) to recover according to the foreign stock markets and recovery in crude oil prices. In September, the SET Index dropped 17.26 points (-1.3%), partly reflecting the negative factor from the weak economic outlook from the gradual downgrade of GDP estimates of many countries around the world while the situation of COVID-19 that still spread and vaccine development still has side effects which are negative sentiment to the market.
However, AWS sees the market has a chance to recover in the short term. AWS recommends investing speculatively in stocks in the segment where stock prices dropped earlier, especially stocks in the energy sector affected by the decline in crude oil prices and weight stocks in the Dividend Playgroup according to our Theme Investment.
The price of crude oil recovered, supporting energy stocks today. AWS recommends only short-term speculation – WTI and Brent crude oil prices rose 3.5% and 2.5% respectively. Previously, WTI crude oil prices fell 14% and Brent dropped 12% compared to the end of August due to weaker-than-expected demand impact which has put Saudi Arabia as a major oil producer announced to reduce the price of crude oil (OSP) exported to the Asian market, including the oversupply after the global crude oil reserves fell less than expected.
As a result, the previous OPEC+ reduction resolution has made the crude oil market face an oversupply situation. That is still spreading in many countries, including production in the United States (Shale oil) that is ready to be produced again If the price of oil to stand at USD45 per barrel.
However, the crude oil price recovers in the short-term, AWS looks positive for energy stocks. (Stay tuned for more content in the Energy Sector analysis, issue 8 Sep). To sum up, the share price declines from our view, AWS recommends speculation, choosing PTTEP (Trading, TP Bt110) and PTT (Buy, TP Bt42) are the top stocks for the group, while PTTGC (Buy, target price Bt58) is the petrochemical sector which will benefit from recovering oil prices the most.
The U.S. Chamber of Commerce expect that there may not be a U.S. company relocated from China despite orders from the U.S. leaders – the U.S. Chamber of Commerce (AmCham Shanghai) reports the survey of more than 200 U.S. manufacturing companies in China which has only 4% of them relocating after the U.S. leader prepared to use tax measures to punish U.S. companies.
In addition, the survey showed that up to 75% of companies confirmed that they would continue to operate in China while 14% will relocate some of their operations overseas and 7% plan to move from China to other countries which are not the U.S. In the past, the U.S. government attempt to pressure Chinese companies which do business in the U.S. both the announcement of the ban on U.S. companies doing business with Huawei, including a ban on Tiktok and Wechat apps from doing business in the U.S., which will effective 20 September 2020 (Source: Bloomberg)
The statistics on the U.S. labor market are strong – by the U.S. Department of Labor’s Bureau of Statistics revealed the job openings and labor turnover (JOLTS) survey report which found that the job openings which is a measure of labor demand in July, up 617,000 positions to at 6.6 million.
Today’s key economic statistics report – The U.S. will report the Producer Price Index (PPI) in August (expected down 0.7%YoY, but up 0.3%MoM), the core PPI in August (expected up 0.2%MoM) and the weekly Initial Jobless Claims.
Technical View – Today, AWS expects the SET Index to move between 1,282 – 1,307 points. (Support at 1,289 1,282 and 1,270 points and resistance at 1,300 1,307 and 1,319 points). The recommended stocks are TASCO, SAWAD, EPG, MTC and PRM
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