ท่านสามารถอ่านและดาวน์โหลดเอกสารได้จาก Daily240822_T
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Limited upside, already reflects interest rate cut
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Market today |
The FOMC minutes signaled an interest rate cut in September ahead of this Fridays Jackson Hole meeting. The market expects a 25 bps cut times over the rest of the year. Since the index already discounts these expectations, investors should be wary of profit-taking. Upside is limited at 1345-1350 with support at 1325-1330.
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Today’s highlights |
• The MPC voted 6-1 to maintain the policy interest rate at 2.50%. They view the economy as expanding as expected, supported by tourism and domestic demand. However, they warn of potential deterioration in SME and household debt quality. • The Deputy Finance Minister discussed potential changes to the digital wallet program, suggesting it may be modified to provide cash to vulnerable groups through the state welfare card. More details are expected after the new cabinet announces its policies in September. • The BoT says the baht's movement is consistent with global and regional currencies, showing little change from the beginning of the year despite some volatility. The baht's recent strength is primarily due to the weakening US dollar. • The US revised down its non-farm payroll figures for April 2022 to March 2023 by nearly 30% or 818,000 positions. This significant downward revision, the largest since the global financial crisis, has raised concerns about a potential "hard landing" for the economy. • The FOMC minutes indicate most members believe it would be appropriate to cut interest rates at the next meeting (September 17-18) if incoming data aligns with expectations. • The REIC reported the confidence index for housing demand in Bangkok and surrounding areas in 2Q24 increased only slightly to 39.6, reflecting low demand and suggesting that stimulus measures have not significantly boosted recovery in the sector.
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Strategy today |
In the short term, the SET will be volatile pending the formation of the new government and announcement of its policies. Weak August PMI figures from the EU and US prompt expectations of a Fed rate cut, aligning with the FOMC minutes. The MPC voted to keep interest rate unchanged at 2.50%. Our strategy is "selective buy".
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Trading today |
While the SET is expected to fluctuate while waiting for the formation of the new government to learn about its economic policies, there are still hopes the Thai stock market will be aided in its recovery by increased fund flows into emerging markets and greater political clarity. We recommend "Selective Buy" with four main themes: 1) Earnings plays: strong profit momentum, with 3Q24 profit expected to grow YoY and QoQ and grow YoY and HoH in 2H24, while valuations are attractive - DELTA, GULF, TU, BTG, BDMS, TRUE and BEM. 2) For risk-averse investors who want to generate cash flow from their portfolio, we suggest dividend stocks for a short-term investment - BCP (expected to pay interim dividend with a 2% yield) and TU (announced interim dividend of Bt0.31/share, ~2% yield). 3) Stocks expected to benefit from the adjustment of ThaiESG conditions that will raise the maximum tax reduction to Bt300,000 and reduce the holding period to 5 years - ADVANC, AOT, CPALL, BDMS, BBL, KTB and GULF. 4) Brent price has recovered as there continues to be attacks on cargo ships in the Red Sea and on energy infrastructure in Russia, although the Middle East conflicts remain fairly contained. We expect the price to be at US$80-90/bbl. Oil stocks are good as a hedge against risk. For high-risk takers, we recommend an upstream oil stock - PTTEP.
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Daily top picks
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GPSC: There are short-term supports from lower bond yield and natural gas price. 2024 core profit is expected to be Bt4.58bn, growing 33.8%, and profit is expected to continue growing 16.3% in 2025. It will also be booking greater contribution after increasing capacity in the renewable energy business in India and Taiwan.
AAV: The company is expected to have short-term benefit from the stronger baht and lower jet fuel price. 3Q24 core profit is expected to grow YoY and QoQ, while 2024 is expected to turn around with a core profit of Bt3.0bn from core loss of Bt206mn in 2023. Operations are expected to then return to normal, with growth of 7% in 2025.
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Today’s reports |
AAV - 2Q24: Core profit misses estimates EPG - Low investor appetite to continue |
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