Asia Wealth Securities (AWS) released an analysis for the trading session on November 20, 2020, indicating the essential events in the stock market as follows:
The overall investment today – AWS expected the SET today (20 Nov) to remain volatile after the SET Index has moved side-way up last week. Market increases in November 2020 by more than 174 points (+14.6%) due to risk on the positive response to (1) U.S. leader election results.
(2) Capital Fund Inflow entering the regional market, including the SET Index and (3) Progress in vaccine development after several companies developing the vaccine gradually declare their effectiveness at high rates.
However, the baht began to weaken as a result of signaling the consideration of issuing measures to control the currency of the BoT, as well as no new positive factors supporting the market. AWS looked at it as a limiting factor to the upside of the market.
For investment strategy, AWS will continue to recommend taking partial profit to reduce the risk of market fluctuation.
After the Monetary Policy Committee (MPC) meeting of the Bank of Thailand (BoT) preparing to consider issuing measures to take care of the baht value. This caused the baht to weaken for 3 consecutive days, totaling Bt0.21 per USD (+0.7%), the latest is at Bt30.38 per USD.
The appreciation of the baht during the past was due to a risk on condition. There is a continuous flow of money into the Thai capital market and spread the stock market, long and short-term debt while the BoT’s opinion assesses the inflow of capital as a speculative nature of the short-term since there is no contract to hedge against the fluctuation of the currency.
The MPC also expressed a cautious view of the impact on the economic recovery trend amid high uncertainty and confirms the need for a limited monetary policy to act at the most suitable time. Currently, the policy interest rate (RP) is 0.50%, which is a record low and the lowest in the region.
However, the BoT is in the process of considering appropriate measures to monitor the currency which must look at both the overview and the potential side effects. There will be another press conference today (20 Nov).
Dow Jones Industrial Average recovered at the end of the trade after Democrats and Republicans agreed to resume negotiations on economic stimulus measures to cure the people and business sectors which affected from the epidemic of COVID-19 again after the number of infected people in the U.S. has continued to increase.
As a result, many states in the U.S. have adopted more stringent measures to control the epidemic. This situation is damaging the domestic economy.
From these points, it is a positive sign as negotiations on the stimulus package were halted as the two parties had conflicting views on several issues. This includes the limits of the measure which Democrats are offering USD2.2tn, while the Republican Party offered just USD1.9tn.
Technical View – Today, AWS expected the SET Index to move between 1,352-1,380 points. The recommended stocks are TACC, MAJOR, PTTGC, CPF and AAV.
1) Global Play (Trading within 1 month) – PTT, SCC, PTTEP, TOP, PTTGC, IVL, CPF and TU
2) Stocks which obtained the benefit from the nearest successful of COVID-19 vaccine (Trading within 1 month) – AOT, AAV, BA, ERW, M, CRC, CENTEL, MINT, WHA and AMATA
3) Dividend Play (Middle-term trading 6-12 months) – SC, LH, QH, KKP, TISCO, RATCH, DIF, INTUCH, EASTW and TTW
4) Long term accumulative stocks (DCA) (Long-term trading over 1 year) – AOT, BEM, ADVANC, WHA, LH, CPALL, CPF, BDMS, HMPRO, BBL and KTB