Daily Strategy: SCBS Expects SET Index to Slow down, Recomm. Defensive Stocks

Siam Commercial Bank Securities expected SET Index to slow down after a 2-week rally, recommending defensive stocks for investment.

Stocks in Asia traded mostly higher on Monday with Japan’s Nikkei leading the gain by 1.7% after the announcement of Prime Minister Yoshihide Suga, saying that he will retire from running for the leadership of LDP.


As of 10:05 local time in Thailand, Nikkei jumped 1.75%, Shanghai Composite rose 0.60%, Hang Seng Index gained 0.26%, ASX 200 fell 0.72% and IDX Composite dipped 0.20%.

SET Index opened on Monday at 1,654.19 points, increased 3.86 points or 0.23%.


Last Friday, Japan’s Prime Minister and the Liberal Democratic Party’s leader Yoshihide Suga stated that he will not run for the leadership race set to begin on September 29, 2021, which means that there will be a new leader for the Liberal Democratic Party (LDP).


Meanwhile, the U.S. reported an increase of 235,000 positions in nonfarm payroll growth in August, which was the slowest growth since January and was far lower than an estimation of 720,000 positions by economists. Meanwhile, the unemployment rate dropped to 5.2% from 5.4%, in line with estimates.


Mr. Ekpawin Suntarapichard, investment strategists of the Siam Commercial Bank Securities (SCBS), through “Kaohoon Jor Talad Program,” stated that the overall outlook this week could slow down in profit-taking sessions after a two-week rally without rebasing as the buying pressure recently was on low free-float stocks, while big-cap stocks started to reach their resistance level.

Regarding the disappointed U.S. nonfarm payroll in August that investors expected Fed to slow down the QE easing, Mr. Suntarapichard said that the QE easing is in the market’s radar by the end of this year, but needed to watch out for negative surprises, which is earlier than expected easing. SCBS forecasted Fed’s QE easing to occur within September or October.

In addition, Mr. Suntarapichard gave a support level for SET Index this week at 1,640 points and the next supportive range would be 1,630-1,620 points. Meanwhile, the resistance level for SET Index is 1,660-1,670 points.

Investment focus should be on defensive stocks, such as GULF (TP Bt50), GPSC (TP Bt96) and ADVANC (TP Bt220)


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