Expect a turn-around at 1,500. |
| Market today |
Concerns the Fed will continue to use tightening monetary policy led to appreciation of the US dollar against the baht, causing fund outflows and downside to the SET. However, follow at a support of 1,500 which is expected to be a turning point. Resistances are at 1,530 and 1,540. If it can break through resistance, signals are good. |
| Today’s highlights |
• Fed minutes indicate the committee has differing opinions about the necessity of raising interest rate, raising concerns over rate direction.• US industrial production in Jul grew 1.0%, higher than expected, and US housing starts in Jul grew by 3.9%, also higher than expected.• EIA reported a decrease in crude oil inventory last week of 5.9mn bbl, a sharper drop than the 2.3mn bbl expected.• Chinese authorities have asked funds to avoid net selling of a large amount of domestic stocks the day after the market in China falls.• Zhongrong International Trust Co., a leading Chinese trust company, defaulted on more than 10 financial instruments, and there is still no compensation plan for their clients.• Tesla Inc. announced another selling price cut of 6.9% on models S and X in China.• The House Speaker has scheduled a meeting on Aug 22 to vote for the prime minister after the constitutional court did not accept the filing from the ombudsman regarding a repeat of candidate.• FTI reported industrial confidence index in Jul at 92.3, down from 94.1 in Jun, to a 10-month low due to high household debt, weak purchasing power, higher interest rate and unclear politics. |
| Strategy today |
The SET will move sideways in a bound of 1,500-1,550 although there is a sign that fund flows are slowing selling and returning to EM markets. Upside is seen as limited as the political situation is uncertain and the end of 2Q23 earnings season is approaching, switching investment to a focus on earnings plays. We recommend “Selective Buy”. |
| Trading today |
Weekly portfolio: The SET is seen to have limited upside as politics is unclear and the end of 2Q23 earnings releases is approaching. We recommend “selective buy” in themes with positive drivers: 1) Stocks whose 2Q23 profit is expected to grow YoY and 3Q23 profit is expected to continue to grow YoY and QoQ – ADVANC, BBL, HMPRO and III. 2) Stocks paying an interim dividend on 1H23 profit with ~2% dividend yield – SPALI, RJH and TU. 3) Speculation in oil stocks after weak 2Q23 profit but heading toward improvement QoQ in 3Q23. Fundamentally – BCP and PTT; strategically – TOP and PTTEP.In the short term we recommend avoid investment in stocks that are expected to be affected by El Nino, which will erode purchasing power in the agricultural sector: Commerce (GLOBAL), Finance (MTC, SAWAD), Automotive (SAT, STANLY), Beverages (CBG, where sugar plays a leading role in cost), Hydropower (CKP) and Food & Agriculture (CPF and GFPT). |
| Daily Focus |
MINT: 3Q23 core profit is expected to grow YoY but decline QoQ due to low season in Europe. However, 3Q23TD reservations at NHH are doing well, backed by increasing demand for leisure and business trips.BDMS: 2H23 profit is expected to grow seasonally HoH and YoY, supported by plans to raise the proportion of revenue from foreign patients to return to pre-COVID-19 level at 30% (1H23 was 28%). We expect 2023 core profit to grow 12% to Bt14bn. |
Today’s reports |
BDMS – Better 2H23 operationsBH – Strong 2023. Earnings to normalize ahead. |
