Market today |
The SET is expected to move up after US PPI came in higher than expected, solidifying hopes the Fed will cut interest rate; the dollar is weakening while the baht is strengthening, bringing more fund inflows. Stimulus is also on the way. The index is expected to push through a previous high of 1435, with resistance at 1440, while supports are at 1415 and 1405. |
Today’s highlights |
• UTCC says the flooding in northern Thailand, including mostly recently Chiang Rai, will have economic cost in the tens of billions of baht as most affected areas are economic zones as well as high tourism areas.
• The Consumer Confidence Index for August 2024 was 56.6, declining for the sixth month to a 13-month low. Consumers are concerned about Thailand's economy, unclear government economic stimulus policies and prolonged conflict in the Middle East.
• The IMF said it would be appropriate for the Federal Reserve to start easing monetary policy at next week's meeting, as upside inflation risks have diminished and the US economy is expected to slow down for the remainder of the year.
• US Headline PPI for August rose 1.7%YoY, lower than market expectations. Core PPI increased 0.2%YoY, higher than expected. Initial jobless claims rose by 2,000 to 230,000, higher than anticipated.
• The ECB cut interest rates by 25bps, the second cut this year. The deposit rate is now 3.50%, the lending rate 3.90% and the refinancing rate 3.65%. GDP forecasts for this year and next were lowered to 0.8% and 1.3% respectively.
• Thailand's Finance Minister announced that the government will distribute the first round of Bt10,000 cash payments to vulnerable groups around September 25-26. The second phase for 30mn people is under consideration due to budget constraints and the need to prioritize economic restructuring. |
Strategy today |
Although in the short term the SET still has good momentum as the political skies have cleared and new stimulus is expected in 3Q-4Q24, in the past month the index has risen by 10%MoM. Hence, be cautious of profit-taking around resistances of 1450-1460. Funds are expected to switch to flow out from banks, financial firms and ICT, and flow into petrochemicals, utilities, property development and healthcare. Externally, there is still the risk of recession, which is slowing inflation and is expected to lead to an interest rate cut by the Fed and ECB. Our strategy is "selective buy". |
Trading today |
Although the SET still has good momentum for the short term, be wary of profit-taking after the leap in the index over the past month. We recommend "Selective Buy" with four main themes:
1) Investors who want to speculate in stocks that have signs of a turnaround and attractive valuation, trading at PER and PBV lower than -1SD - CPN, GPSC and TFFIF.
2) Investors who want to speculate in stocks expected to benefit when the interest rate cycle starts down - leasing (MTC), commerce (CPALL and CPAXT), utilities (GULF) and REITs (LHHOTEL and DIF).
3) Stocks expected to benefit from short-term stimulus packages from the new government in September, particularly those related to consumer staples - CPALL, CPAXT, BJC, TNP and CBG.
4) Stocks expected to benefit from the Vayupak Fund. We highlight stocks in SET100 that have: 1) good dividend yield, minimum of 3.5%, 2) SETESG Ratings between A and AAA and 5-star CG and 3) strong financial position, with profit expected to grow in 2025 - KTB, BBL, BCP, ADVANC and HMPRO. |
Daily top picks |
CPALL: 2H24 profit is expected to grow YoY, leading the Commerce sector. 3Q24 profit is expected to grow YoY and QoQ, supported by higher sales and margin at CVS and CPAXT. 4Q24 - high season - is expected to be the best quarter in 2024 and valuation is attractive, trading at 2024F PER of 25x (-2SD).
GPSC: It benefits from lower natural gas cost. 2024 core profit is expected to be Bt4.58bn, growing 33.8%, and expected to grow by 16.3% in 2025. There is also a catalyst from greater contribution from overseas renewable energy business in India and Taiwan. |
Today’s reports |
Commerce - Bottomed out, new catalysts lined up
THANI - Facing a crisis on repossession losses |
