| Expect to rise, supported by fund flows. |
| Market today |
The SET is expected to rise with resistances at 1,535 and 1,545 after technically the index can stand above 1,517 and the baht began to appreciate, positive for fund inflows. Politics is expected to have less affect on the market after the postponement of the scheduled vote for the PM on Jul 27 and the long weekend beginning the next day. |
| Today’s highlights |
• The Constitutional Court expects to take seven days to decide whether to accept the ombudsman’s petition, while House Speaker cancelled the July 27 parliament meeting. • FTI reported vehicle exports grew 20.22% YoY in Jun, with production growing 1.78% YoY. It has now cut its vehicle production target by 2.01% to 1.9mn vehicles. • The Administrative Court dismissed the lawsuit between BTS and MRTA about the second auction for the Orange Line, saying the announcement and documentation were lawful. • IMF has upped its 2023 world GDP forecast to 3% from 2.8%, leaving 2024 world GDP unchanged at 3%. US GDP is expected to grow 1.8% in 2023 and 1.0% in 2024, with China expanding 5.2% in 2023 and 4.5% in 2024. • The US Consumer Confidence Index by CB rose more than expected to its highest since Jul 2021. • The Chinese government signalled additional measures to support the real estate sector, including creating employment stability along with stimulating demand and consumption and resolving local authority debts. • Microsoft and Alphabet earnings beat quarterly estimates on cloud and AI businesses. |
| 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 |
PTTGC: The company benefits from a higher oil price, especially as the production of natural gas from the Gulf of Thailand steps up, helping to reduce cost. Even though profit was weak, price is believed to have already incorporated this. Valuation is inexpensive, trading at PBV of 0.5x, with estimated dividend yield of 3.1%.KCE: Profit is expected to return to growth in 2H23 from pent-up demand, especially from customers in Europe, compensating for price cuts made to customers. Improvement is expected through 2024 from a large capacity increase. |
Today’s reports |
Petrochemicals – Sustainability of better spread in doubtHMPRO – 2Q23: In line with market estimatesKKP – Cut 2023 guidanceSCGP – 2Q23: Beat INVX & market estimates |
