Maybank Kim Eng (Maybank) released an analysis for the trading session on October 28, 2020, indicating the essential events in the stock market as follows:
The SET index yesterday recovered on positive expectations for constitutional amendment in the future. The SET index closed at 1,208.95 (+0.98 points) with a trading value of THB46b (THB42b previous day).
Foreign investors net sold Thai shares by THB139m (Institutional investors net sold by THB969m). There were net Short on SET50 Index Futures by 588 contracts.
Eyes on 3Q20 earnings results: Previously, the Thai stock market has fluctuated driven by political issues that saw increasing violence. However, an effort to find a solution to the problem through the opening of the Extraordinary General Assembly in the past two days (26-27 October) may be a good start to address this concern.
Although it may not be able to resolve all issues at once, there seems to be more progress, such as the framework of the constitutional amendment which would have to keep an eye on in the next period that the process would be slow or fast.
Such factors are thought to be helpful to some extent in reducing violence in the short term. In the coming days, Maybank believed the Thai stock market may begin to weigh more on the SET-listed companies’ 3Q20 earnings results reporting. So this is a good time to speculate on stocks that are expected to report strong earnings or stocks with better than expected earnings and continue to grow in 4Q20.
Investment Strategy: The SET index today is forecast to rebound in a range of 1,200 support and resistance of 1,230 points. Focus on stocks with strong earnings growth.
Technical View – SET holds above 1200, likely rebound
– SET Index closed at 1208.95 pts. (+0.98 pts.)
– The market starts to see a recovery signal after the index manages to hold above the key support area at 1200 pts.
– The 240 minute chart shows a Stochastic indicator giving a Bullish Divergence Signal.