To move up if it stays above 1,500. |
| Market today |
The SET will be weighed down by concerns about the Fed’s tightening monetary policy; however, sentiment will be encouraged by progress in the formation of a government. If the SET can hold on at supports of 1,520 and 1,510, a move up is expected and resistances are 1,540 and 1,550. |
| Today’s highlights |
• US weekly jobless claims dropped more than expected. Philly Fed manufacturing index rose higher than expected. US 10Y government bond yield rose to a 15Y high at 4.31%.• Fitch Ratings may consider rethinking China’s A+ sovereign credit rating as debt-to-GDP ratio has increased. It will also review the medium-term GDP forecast for developed countries, including the US, the UK, Germany and Japan.• Walmart reported an earnings beat for 2Q23 but it is worried about a decline in household spending in 2H23.• The PBOC said it will ensure ample liquidity in the system and will implement effective policies to support economic recovery.• China's crude oil reserves decreased for the first time in 33 months as the government released oil to meet increasing demand.• China Evergrande has filed for bankruptcy protection from its creditors in US courts.• The Commerce Ministry reported a study showing that El Niño has dried up the Panama Canal. This has led shipping companies to gradually increase their intercontinental shipping fees after reducing their capacity per trip so Thai export costs are expected to increase.• The Department of Business Development reported foreign direct investment (FDI) of ~Bt59bn in 7M23. The top five investors were Japan, the US, Singapore, China, and Germany.• The Supreme Administrative Court reviewed the case regarding the Green Line installation and operations. It upheld the Central Administrative Court's ruling, mandating that the BMA and BSTC pay operational and maintenance fees according to the contract, amounting to Bt11bn. |
| 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 release of 2Q23 earnings has ended. We recommend “selective buy” in themes with positive drivers: 1) Stocks whose 2Q23 profit is expected to grow YoY with YoY and QoQ growth continuing in 3Q23 – ADVANC, BBL, HMPRO and III. 2) Stocks paying an interim dividend on 1H23 profit with ~2% 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 |
CRC: 3Q23 earnings are expected to be flat or drop YoY due to slower retail business sales growth and a high ratio of SG&A expenses to sales. These factors are believed to be in the price. Profit in 4Q23 is expected to rebound to the year’s best.ADVANC: Earnings in 3Q23 are expected to grow both YoY and QoQib eased competition in the mobile phone and FBB businesses and a growing customer base. The recent fall in price after XD on its Bt4/share dividend is seen as a buying opportunity. |
Today’s reports |
BGRIM – Earnings trend back on track SAWAD – Rising ECL, falling NIM, slowing loan growth |
