Asia Wealth Securities (AWS) released an analysis for the trading session on October 26, 2020, indicating the essential events in the stock market as follows:
The overall investment today – AWS estimates the SET this week (26-30 Oct) will move in the range of 1,180-1,242 points. Issues to watch this week are domestic political factors that will make the SET Index more downside when compared to the regional stock markets.
The government will open a council meeting (Extraordinary period) on 26-27 October to listen to the opinions of the members of Parliament in finding a way out of the country.
Foreign factors still need to monitor the new U.S. economic remedial measures while there is a small likelihood that an agreement will be reached before the U.S. leadership election (3 Nov), progress will be positive for the overall investment. This included additional stimulus measures at the major world central bank meetings, including the BOJ meeting (28-29 October) and the ECB meeting (29 October).
Overall, the stock markets remain volatile, especially the gradual announcement of earnings and negative factors both at home and abroad. For investment strategy, AWS still recommends reducing the investment portfolio to reduce the risk of stock market volatility.
It is recommended to invest only in stocks that have their own positive factors, stocks that benefit from falling crude oil price and stocks that benefit from government stimulus measures according to AWS Core Investment.
The latest crude price drop due to (1) An increase in Libya’s output from 0.1-0.2 million barrels per day (MBD) to 1 MBD by the end of 2020 and 1.2 MBD in 2021 after the political conflict in the country was resolved. Libya is considered as a member of OPEC and is exempt from a production cut deal.
(2) OPEC+ continues to approve the original resolution to cut the proportion of the reduction in production from 7.7 MBD to 5.7 MBD (starting 1 Oct 2021) in line with the previous Russian stance. There is no review plan for such production cuts.
(3) Overview of economic expansion is still uncertain. As a result, estimates of crude oil demand remain downside after several European countries resumed lockdown measures. While the U.S. economic stimulus is still slower than expected.
These factors are negative for stocks in the upstream energy sector, stocks in the refining and petrochemical business sector, but it will be positive for stocks in the contractor sector such as CK, ITD, STEC and UNIQ, construction materials group including SCC, TOA and TASCO, SPP power plant group such as GULF, BGRIM and GPSC that benefit from lower production cost faster than revenue (Ft revenue) and those whose costs come from crude oil such as EPG, OSP and BJC.
Technical View – Today, AWS expects the SET Index to move between 1,200-1,232 points. The recommended stocks are TPIPP, MC, CPF, TRUBB and SPCG.
1) Benefit from lower crude oil price – CK, ITD, STEC, UNIQ, SCC, TOA, TASCO, GULF, BGRIM, GPSC, EPG, OSP and BJC
2) Dividend Play (Middle-term trading 6-12 months) – KKP, TISCO, QH, LH, SC, ORI, NOBLE, DIF, INTUCH, HANA, SCCC, EASTW and TTW
3) Long-term accumulative stocks (DCA) (Long-term trading over 1 year) – ADVANC, AOT, BDMS, BEM, CPALL, DIF and PTT