Market today |
The FOMC decided to cut interest rate by 50bps - its steepest cut in 16 years - and will cut another 25bps in the remaining two meetings this year, lining up with market expectations. US markets and gold had risen before taking a dip, while the US dollar index rebounded. The SET is expected to face sell on fact with supports at 1420 and 1410, while resistances are around 1445-1450. |
Today’s highlights |
• The Prime Minister has signed off on appointing a committee for economic stimulus policies. The first meeting is expected next week, with measures sent to parliament for approval.
• The FTI reported a drop in the industrial confidence index for August to 87.7 from 89.3 in July due to concerns about flooding, slowing domestic demand and high rejections for auto loans. It urges the government to implement relief measures for businesses and flood-affected areas, suggesting tax measures.
• The PM met with the TAT governor to discuss tourism stimulus plans for 2025, emphasizing that funds should be distributed to all areas. The TAT governor will propose a tourism plan in 1-2 weeks and supports reviving projects like "We Travel Together" and "Half-Half".
• The Minister of Finance will meet with the BoT to discuss the 2025 inflation target, currently at 1-3%. He views this as too low and suggests raising it to facilitate stronger economic growth.
• The Federal Reserve cut short-term interest rates by 50 bps to 4.75-5.00%, the first rate cut in over four years. Markets interpret this as concern over economic conditions and a labor market slowdown. The Dot Plot signals another 50 bps cut by year-end.
• The Fed Chairman stated that the rate cut represents a shift in monetary policy stance. He indicated that future rate decisions will be made on a meeting-by-meeting basis.
• Weekly crude oil stocks decreased by 1.6 mn bbl, more than the 0.2mn bbl expected. Crude stocks at Cushing, Oklahoma, the delivery point for futures contracts, fell by 1.9mn bbl. |
Strategy today |
In the short term the SET is resting and has limited upside. The Fed's interest rate cut may support short-term investment in risky assets. However, be cautious on the difference in the BoJ's monetary policy, which will bring yen carry trade and trigger selling of risky assets around the world while EM markets are uncertain. Domestically, the capital market will see fund flows into defensive stocks such as Commerce, Healthcare and Utilities. Our strategy is "selective buy". |
Trading today |
The SET is resting and has limited upside but is being shored up by hopes of an interest rate cut by the Fed, which would support investment in risky assets. We recommend "Selective Buy" with three main themes:
1) Investors who want to speculate in stocks that have signs of a turnaround and an attractive valuation, trading at PER and PBV lower than -1SD - AP, GPSC, MTC and AMATA.
2) Investors who want to speculate in stocks expected to benefit when the interest rate cycle starts down - Leasing (MTC), Property Development (AP), Commerce (CPALL and CPAXT), Utilities (GULF) and REITs (LHHOTEL and DIF).
3) Stocks expected to benefit from the Vayupak Fund. We highlight stocks in SET100 that have: 1) good dividend yield of at least 3.5%, 2) SET ESG Ratings between A and AAA and 5-star CG and 3) a 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).
MINT: Profit momentum is seen to be strong. 3Q24 core profit is expected to grow YoY but seasonally decline QoQ. 2H24 core profit is expected to grow HoH and YoY, backed by the hotel business in Europe, strengthened by increasing ARR. Stock price began to recover in line with the Thai market but is still -4.2%YTD, making valuation attractive (PBV at -2SD). |
Today’s reports |
SCGP - Target EBITDA growth with high margin products |
