Asia Wealth Securities (AWS) released an analysis for the trading session on October 30, 2020, indicating the essential events in the stock market as follows:
The overall investment today – AWS expects the SET today (30 Oct) to continue to fluctuate in a sideway to sideway down, although the U.S. reported better-than-expected GDP in 3Q20, the same negative factors such as concerns over the COVID-19 situation in the U.S. and EU, the decline in crude oil prices, including the uncertainty of the political situation in the country are still factors that depressed the recovery of the SET Index.
For investment strategy, AWS recommends reducing your investment portfolio to reduce the risk, focusing on investing in AWS Core Investment portfolio. In the short-term, recommend speculation in stocks benefiting from the decline in crude oil prices. In the long-term, recommend gradually accumulating Dividend play and DCA stocks.
Crude oil prices continued to decline – AWS looks at four factors impacting the price of crude recently from (1) Expectation of the U.S. presidential election that weighs Joe Biden to win the election which one of the Democrats’ policies is to return to support the Iran nuclear deal and cancel sanctions on Iran.
This will cause Iran to return 1.5-2 million barrels per day of crude oil exports to the world market. (2) Impacts from the announcement of a lockdown in France and Germany, effective on 2 Dec, to block the second wave of COVID-19 pandemic, affecting the demand for oil (3)
The attitude of OPEC+ group has not yet signaled the use of measures to support oil prices, but the same resolution remains to add another 2 million bpd in early 2021 (following the next OPEC meeting held between 30 Nov – 1 Dec) and (4) The impact of Hurricane “Zeta” does not boost crude prices as AWS expected, although U.S. BSEE said in a recent report (29 Oct) that about 85% of crude oil production and 58% of gas production were suspended due to the supply side problems that are still oversupplied.
For investment strategy, choosing to invest in stocks that benefit from falling crude oil prices following AWS Core Investment.
Key economic data – The U.S. Department of Commerce revealed the GDP in 3Q20 at 33.1% which was the highest growth ever since the U.S. Data collection began in 1947 and grew better than the Market Consensus expected at 32%, as a result of the government easing lockdown measures which leads to an open economy and employment after the U.S. shut down the previous economy to control the spread of the COVID-19 virus.
The U.S. Department of Labor said that the number of first-time unemployment benefits dropped for a second straight week, dropping to 751,000 in the past week and below the Market Consensus estimate of 778,000.
Technical View – Today, AWS expects the SET Index to move between 1,184-1,221 points. The recommended stocks are KKP, KTC, JMT, TASCO and MBAX
Benefit from lower crude oil price – CK, ITD, STEC, UNIQ, SCC, TOA, TASCO, GULF, BGRIM, GPSC, EPG, OSP and BJC
Dividend Play (Middle-term trading 6-12 months) – KKP, TISCO, QH, LH, SC, ORI, NOBLE, DIF, INTUCH, HANA, SCCC, EASTW and TTW
Long-term accumulative stocks (DCA) (Long-term trading over 1 year) – ADVANC, AOT, BDMS, BEM, CPALL, DIF and PTT