Asia Stocks Extend Gains as US 10-Y Bond Drops, Analyst Expects SET to Gain Momentum


Stocks in Asia edged mostly higher on Tuesday, following a huge gain in Wall Street overnight as U.S. 10-year bond yield dropped to 1.4%.

 

As of 9:30 local time in Thailand on Tuesday, Nikkei dropped 0.16%, SSEC rose 0.21%, HSI increased 1.01%, ASX 200 gained 0.39% and Kospi advanced 2.17%.

Over the night, Dow Jones jumped 603.14 points or 1.95% to close at 31,535.51 points. S&P 500 hiked 2.38%, and Nasdaq soared 3.01%.

The U.S. 10-year Treasury note continued to slide to 1.41% after topping 1.6% last week.

Yesterday, SET Index closed at 1,500.92 points, increased 4.14 points or 0.28% with a trading value of 84.5 billion baht.

 

Asia Wealth Securities (AWS) expected the SET today (2 Mar) to move in the range of 1,487-1,518 points. Positive sentiments are from foreign factors to support the stock market today after the CDC approved the COVID-19 vaccine from Johnson & Johnson. While the pressure from U.S. bond yield is falling (AWS looked positive for Defensive Stock, especially the power generation business), as well as the U.S. House of Representatives passed the draft of the economic stimulus package.

AWS stated that this creates anticipation for a new round of Fund Flow that will flow into regional stock markets, including the SET index. There is only a negative factor that depresses the price of crude oil (Negative to stocks in the energy sector).

 

For investment strategies after AWS recommended increasing cash holdings to mitigate risks from market fluctuations over the past 2 weeks. AWS saw that the current conditions are a good time to start accumulating stocks to play a new round of speculation. Thus, the security company recommended EGCO, GULF, GPSC, BGRIM, and BPP, as well as stocks that benefit from vaccines based on its core investment (Core Investment: Vaccine Expectations and increase in economic stimulus measures).

 

Three positive factors from abroad support regional stock markets – Sentiment to the overall Thai and regional stock market investment today depend on 3 positive foreign factors: (1) CDC approves COVID-19 vaccine which was unanimous by the U.S. Centers for Disease Control and Prevention (CDC) had certification of the novel coronavirus vaccine of Johnson & Johnson after the vaccine was approved by the U.S. Food and Drug Administration (FDA) on Saturday (2) The U.S. economic stimulus approved by the U.S. House of Representatives – The U.S. House of Representatives vote for approval of the USD1.9tn economic stimulus package during the past weekend which is in the next stage in the process of being considered by the Senate before sending it to President Joe Biden to sign the next law which expected not later than mid-March and (3) Bond Yield recovery worries have begun to decline – The latest scenario, the 10-year of the U.S. Treasury yield is 1.427%, down after hitting a 1.556% high last week.

 

WTI crude oil for April delivery closed at USD60.64 a barrel, down 86 cents (-1.4%) before the start of the OPEC+ meeting between 3-4 Mar 2021, the key issue lies in determining the direction of crude oil production after Mar 2021, with Market Consensus estimates that there will be an increase in production capacity so expected that OPEC+ may increase the supply of oil to the market by as much as 1.5mn barrels. To sum up, AWS looked at this issue as a factor that will further pressure our investment in energy stocks.

 

Core Investment

1) Global Play (Trading within 1 month) – PTT, PTTEP, TOP, PTTGC and SCC

2) Green energy stocks (Trading within 3-6 months) – GPSC, EGCO, GULF, BGRIM, BPP, BCPG, EA and ACE

3) Expectations for the vaccine and increased stimulus measures (Trading for 3-6 months) – BBL, KKP, BEM, CPF, TU, M, OSP, CPALL, HMPRO, CRC and CHG

4) Dividend Play (Middle-term trading 6-12 months) – SC, LH, QH, KKP, TISCO, RATCH, DIF, INTUCH, EASTW and TTW

5) Long term accumulative stocks (DCA) (Long-term trading over 1 year) – AOT, BEM, ADVANC, WHA, LH, CPALL, CPF, BDMS, HMPRO, BBL and KTB

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