To move between 1,490-1,520. Watch for PM selection. |
| Market today |
Politics moved another step forward after negotiations finished for the position of House Speaker and this should support the SET for a short time, with next resistances at 1,510 and 1,520 as the PM will be not be selected until next week. Support at 1,490 is expected to firm the SET in case it falls; follow at 1,479. If it does not go lower, signals are good. |
| Today’s highlights |
• Today at 9:30am, Parliament will open to select the House Speaker and deputy speakers. Move Forward and Pheu Thai parties have agreed to propose Mr. Wan Muhamad Noor Matha as speaker. • The BoT plans to propose three measures to reduce household debt by the end of July. We expect growth in consumer finance will slow, but using risk-based pricing will benefit to overall loan yield and will have little effect on profit. • US manufacturing PMI by ISM in Jun was lower than expected, the lowest since May 2020, as was S&P Global Manufacturing PMI Final in Jun, also lower than expected and the second month of contraction. • FedWatch Tool shows 89.9% probability the Fed will raise interest by 25bps to 5.25-5.50% at the FOMC meeting on Jul 25-26. • China manufacturing PMI in Jun declined MoM, indicating China’s manufacturing sector is being hurt by the significantly weakened economy. • China is enforcing the measure to control exports to Europe and the US of two minerals that are key raw materials in the production of semiconductors in response to their limits on chip exports to China. • Saudi Arabia extended the period of voluntary oil production cut of 1 mn bbl/day to end-August, while Russia will also cut production by 0.5 mn bbl/day in August, decreasing oil supply by 15%. |
| Strategy today |
Even though the SET is likely to recover, upside is limited due to domestic risks, particularly with regards to politics: the opening of Parliament on Jul 4, fund outflows from financial markets that are weakening the baht, which affects investment in large-caps, and external risks such as concerns that central banks are signalling a continued rise in interest rates, which may bring on a global recession. We recommend “Selective Buy”. |
| Trading today |
Weekly portfolio: External and domestic risks continue to pressure, limiting the SET’s upside. We recommend “selective buy” in themes with positive drivers: 1) Stocks whose 2Q23 profit is expected to grow YoY – AOT, BBL, ADVANC, MINT, OSP, BDMS and BEM. 2) Stocks with strong fundamentals that are seen as having high dividend potential with 2023 dividend yield of over 5% - TISCO, LH and AP. 3) Stocks able to step back up a month after the sharp fall since the May 14 general election – BH, BTS, CHG and CPALL. 4) Stocks expected to benefit from a weakening baht – AH, NYT and ERW.In the short term we recommend avoiding investment in: 1) power plants and PTT group stocks as there is risk of a change in the energy price structure in the new government’s policies, and 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 & Agricultural (CPF and GFPT). |
| Daily Focus |
CPALL: 2Q23 core profit is expected to grow YoY from higher sales in the CVS unit and MAKRO, but fall QoQ due to seasonal factors. 2H23 profit will improve HoH from lower financial cost after completion of the refinancing of CPAXT debt at the end of April.PTTGC: The company benefits from the rise in oil price, with more natural gas production in the Gulf of Thailand helping lower costs, burnishing sentiment toward 2H23 profit. Valuation is not expensive, trading at 0.5x PBV, and dividend yield this year is expected at 3.1%. |
Today’s reports |
MINT – Preview 2Q23: High season in Europe to drive |
