| Resting, uncertain politics. Wait for FOMC meeting. |
| Market today |
The SET is expected to rest with limited upside at resistances of 1,535 and a previous high of 1,545, while a weakening is possible from uncertainty of politics. Investors are evaluating interest rate direction at the FOMC meeting on Jul 25-26. Supports are at 1,517 and 1,510. |
| Today’s highlights |
• Today at the meeting of the eight coalition parties, Phue Thai will propose cancelling the MOU and setting up a new agenda, including a possibility of delaying the third round of voting for a PM now scheduled for Jul 27, after the ombudsman filed a petition with the constitutional court asking it to rule on the prohibition of re-nominating a person for PM. • FTI said the Industrial Confidence Index in Jul rose MoM, the first increase in three months, backed by growth in private consumption and tourism. • Composite PMI in Jul was at 52.0, a 5-month low, but still higher than 50.0, which indicates expansion in business activities for six consecutive months. • The Secretary-General of the UN is insisting Russia return to the grain export deal via the Black Sea with Ukraine after a spike in prices for wheat, corn and soybean. • The FedWatch Tool gives 99.8% probability the Fed will raise interest rate by 25bps to 5.25-5.50% on Jul 25-26 and 39.9% that the Fed will cut the rate by 25bps to 5.00-5.25% on Mar 19-20, 2024. • Preliminary composite PMI of Eurozone in Jul decreased more than expected to a 8-month low and was also lower than 50, indicating contraction in business activities. The ECB meets on Jul 27 and is expected to raise interest rate by 25% to tackle inflation. • China’s National Development Reform Commission announced a measure to promote investment in private infrastructure and is ready to financially support projects. • Apple is asking suppliers to manufacture and distribute 85mn iPhone 15s this year, close to last year, even though demand is falling and supply side is facing risk. |
| Strategy today |
In the short term the SET is still waiting for the formation of a new government, while external factors related to the world economy are starting to relax to some extent. Watch the FOMC, ECB and BoJ monetary policy meetings this week. The Fed is expected to raise rate 25bps, expected to be this year’s final step up, and already in the market. We recommend “Selective Buy”. |
| Trading today |
Weekly portfolio: The SET is pressured by domestic factors, with some easing in external factors. We recommend “selective buy” in themes with positive drivers: 1) Stocks whose 2Q23 operating results are expecting to continue growing YoY and QoQ – BBL, ADVANC, BEM and GULF. 2) Speculative stocks whose 2Q23 operating results are likely to beat market expectations – HMPRO and SCGP. 3) For investors who can handle risk, speculate on stocks based on a shift in the political scene– CPAXT, BJC, TNP, AMATA, OSP, HTC, KCE and HANA.In the short term we recommend avoid investment in: 1) Food (TU, CPF GFPT and BTG), which is seen by the market as likely to be downgraded as 2Q23 profit is expected to weaken QoQ and YoY; 2) stocks expected to be affected by El Nino in 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) and 3) Tourism stocks that may be negatively affected by politics. |
| Daily Focus |
SCGP: Profit is expected to improve in the next 1-2 quarters, which helps limit downside risk. 2Q23 core profit is expected to grow 15%QoQ from lower raw material and coal costs and continue to improve in 3Q23 from full-quarter operations in Thailand and Indonesia.BEM: The stock price is recovering based on a strong profit outlook. 2Q23 profit is expected to grow 19%QoQ and 40%YoY, with 3Q23 profit continuing to grow QoQ and YoY, supported by more traffic on the expressway and more passengers on the MRT. |
Today’s reports |
Bank – 2Q23: Beat on NIM and gain; miss on ECLsBEM – Still a room for further rallyGGC – Preview 2Q23F: Thinner profit expected |
