Range-bound |
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Market today | Although sentiment will be brightened by US markets, the SET has no catalysts and this limits recovery with resistances at 1390 and 1402, which is used as a following point. If the index can break above this, signal would be positive. Lower bound is at support of 1375; a fall below this will give a negative signal, with next support at 1370. | Today’s highlights | • The US Consumer Confidence Index for Jan 2024, as reported by the University of Michigan, beat expectations and was the highest since Jul 2021, backed by greater optimism about the economy and future prospects, along with a reduction in inflation concerns. However, existing home sales in Dec slid 1%MoM and 6.2%YoY to 3.78mn units, lower than market expectations. This came out of low housing stock in the market, which has driven up home prices.
• China has worked around Western sanctions by purchasing large quantities of discounted oil from Russia, making Russia the largest crude oil supplier to China in 2023, surpassing Saudi Arabia.
• The Chinese government plans to implement strict measures to prevent excessive development of new electric vehicle (EV) projects by automotive companies and local governments to avoid flooding the market and raising trade issues in Europe by increasing market competition.
• The unrest in the Red Sea is beginning to impact the transportation of agricultural goods (such as fruits and coffee), which could slow down the reduction in food-related inflation.
• Florida governor Ron DeSantis has withdrawn from the race for the Republican nomination for president and is supporting Trump.
• The SET has outlined a three-year strategy to enhance market confidence. Part of this strategy involves implementing AI systems to analyze trading data and detect fraudulent investment news. | Strategy today | In the short-term the Thai stock market is likely to continue to be pressured by externals as hopes of a reduction by the Fed in interest rate fade after US economic figures such as inflation, employment and manufacturing were not bad as expected. This means risky asset markets are likely to rest in the short term, and at home, the market still lacks a new catalyst. The strategy is “defensive and accumulate fundamental stocks to wait for the market recovery”. | Trading today | Weekly portfolio: In the short term the SET is expected to be fragile and still pressured by externals, while still lacking new domestic catalysts to stimulate investment atmosphere. We recommend “defensive and accumulate fundamental stocks to wait for the market recovery” in two main themes:
1) Medium-term investors who want to invest in high-quality dividend stocks – AP, BCP and KTB. Criteria are: has paid a consistent dividend for at least 10 years, has a SET ESG Rating of AAA or AA, with dividend yield after deducting 2023 interim dividend of above 5% and 2024 profit expected to grow YoY
2) For long-term investors, we recommend DCA investment as it offers the best opportunity after the SET fell, reducing risk significantly, in stocks with undervalued stock price – BBL, BDMS, BEM, CPALL, PTT and SCC, all in SET100 and leaders in their industry with SET ESG Rating of AAA and AA, valuation below 10-year average and strong operating results.
In the medium term we recommend being cautious on stocks that are set to be affected by El Nino, which will erode purchasing power in the agricultural sector: Finance (MTC, SAWAD), Automotive (SAT, STANLY), Beverages (CBG has high sugar cost) and Food & Agriculture (CPF GFPT and BTG). | Daily top picks | CPALL: 4Q23 profit is expected to grow 54%YoY and 9%QoQ, the best growth in the commerce sector, off higher sales volume and lower interest expense after CPAXT finishing refinancing in Apr 2023. 2023 profit is expected to grow 36%, followed by 17% growth in in 2024. The stock price does not yet reflect the strong profit momentum.
GULF: 4Q23 profit is expected to continue growing on the Oct 2023 startup of a new IPP unit (GDP) and higher profit share from Jackson Generation. 2023 core profit is expected to grow 32%, with 28% growth in 2024. The stock price is laggard, with 2024 PER and PBV lower than 5-year average. | Today’s reports | GFPT – Preview 4Q23F: Earnings to soften YoY
KBANK – 4Q23: Huge gain but weaker core earnings
KTB – 4Q23: Big miss on ECL on one corporate loan
KTC – 4Q23: In line with modest growth ahead
SPRC – Preview 4Q23F: Earnings to sour QoQ
TTB – 4Q23: Tax benefit raises earnings forecast | | Click here to read and/or download Daily240122_E 1 |
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