Asia Stocks Edge Higher as Analyst Sees SET Index in a Good Shape amid Economic Recovery

Stocks in Asia all traded higher in the morning session on Monday, after an increase in oil prices and a stronger-than-expected U.S. nonfarm payrolls report, which improved optimism for a quicker economic recovery.


As of 9:26 local time in Thailand on Monday, Nikkei rose 0.94%, SSEC increased 0.59%, HSI gained 0.27%, ASX 200 jumped 1.60% and Kospi advanced 0.53%.

Last Friday, SET Index closed at 1,544.11 points, increased 10 points or 0.65% with a trading value of 104 billion baht.

Dow Jones Industrial Average soared 1.85% to close at 31,496.30 points, S&P 500 rose 1.95% and Nasdaq increased 1.55%.


Last week, the U.S. Labor Department reported that nonfarm payrolls jumped by 379,000 for the month, beating an expectation of 210,000, and the unemployment rate fell to 6.2%, showing a sign of economic recovery, while Covid-19 cases steadily dropping amid vaccine rollouts.


The surge in oil prices came after the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+)’s agreement to extend most oil output cuts into April, coupled with the report of Saudi Arabia‘s oil facilities being attacked on a petroleum storage tank at Ras Tanura, one of the largest oil shipping ports in the world on Sunday.

As of 9:45 local time in Thailand on Monday, March 8, 2021, Brent Crude rose 2.72% to $71.25 a barrel. Meanwhile, WTI increased in a similar direction with a gain of 2.60% to $67.81 a barrel.


KGI Securities stated that A very strong US February employment report and Senate approval of the stimulus package should further drive cyclical plays, which constitute a large part of the Thai market. On the domestic side, hopes for more Thai consumption stimulus and GDP upside could also underpin major domestic plays.


The SET Index looks to be in good shape. However, as mid-2022 earnings yield gap narrows to 3.6% and bond yields could creep up further, more market volatility is ahead and the security company would turn more cautious if the SET Index tests its tactical 1Q21 target at 1,590pts.

In the near-term, we stick with value cyclical plays, banks and laggards in economic re-opening themes; contractors and healthcare are attractive laggards.


Regarding the positive backdrop on US macro, rising oil prices, bond yield spike and last but not least optimism on new Thai economic stimulus in 2Q21, KGI recommended investors to stick with cyclical plays (PTTGC, IVL, ESSO), banks (KBANK) and laggards in re-opening themes (CPN and AOT). In the mid-cap sectors, KGI also saw contractor (STEC) and healthcare (BDMS) as attractive laggard names.


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