ท่านสามารถอ่านและดาวน์โหลดเอกสารได้จาก Daily240405_T Pressured by geopolitics |
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Market today | The SET is expected to be pressured by tension in the Middle East, which is pushing up oil price and thus inflation, leading to greater uncertainty over the Fed’s timeline for cutting interest rate. A support is at 1368. A fall below would open up downside with next support at 1360. The upper bound is limited at resistances of 1377 and 1385. | Today’s highlights | • US initial jobless claims last week rose to 221,000, higher than expected and the highest in two months; the US trade deficit in Feb increased 1.9% to US$69.8bn, higher than expected.
• Yesterday, several Fed officials signalled their opinion the Fed should not rush to cut interest rates if inflation remains high.
• Oil prices (WTI +1.36% to $86.59/bbl, Brent +1.45% to $90.65/bbl) reached their highest since Oct 20, 2023, on geopolitical tension and tight oil supply.
• The Thai Bond Market Association (ThaiBMA) said corporate bond issuance in 1Q24 was Bt270bn, down 24%YoY due to high interest rates. Large businesses tapped other funding channels and were concerned about bond defaults. They expect issuances in 2024 at ~Bt1tn, as rates may decline in 2H24.
• The Thai Auto Industry Association forecasts 2024 car production at 1.9mn units, up 3.17% YoY, 750k for domestic sales and 1.15mn for export, driven by strong export demand especially to the Middle East and Australia.
• Microsoft's CEO will visit Thailand on May 1 and hold discussions with the PM about investing over Bt100bn in data centers, cloud computing and AI, after announcing investment plans and signing an MOU with Thailand. | Strategy today | In the short term, the Thai capital market is likely to recover on hopes of recovery in China and US manufacturing PMI, while Thai inflation is expected to remain sufficiently low to allow the BoT to cut interest rate. The strategy is “Selective Buy”. | Trading today | In the short term the SET is likely to recover on expectation of recovery in China and US manufacturing PMI. We recommend “Selective Buy” in four main themes:
1) Speculative stocks after Brent exceeded US$85/bbl, with lower recession concerns supporting demand, while supply is affected by tension between Russia and Ukraine. For high risk-takers, we recommend trading PTTEP (long-term oil price up by US$1/bbl raises target price by Bt5/share) and TOP (refinery margin and inventory gain); the rise in price is negative to oil retailing (low marketing margin) and the aviation sector (higher cost).
2) Stocks that benefit from recovery in manufacturing (especially China) and whose profit has bottomed but this is not yet reflected in stock price – GFPT, KCE, SCGP, IVL and PTTGC.
3) Stocks that benefit from seasonally improving tourism as the country celebrates Songkran. This year the government is organizing a 21-day Songkran festival beginning April 1 and running through April 21 (13-year historical data shows tourism stocks provide good returns in April, at an average of 2.5%MoM) – AOT, ERW, MINT and CPALL.
4) Speculative stocks on the beginning of a downtrend in interest rate, especially if Thai inflation rate in March continues low – Finance (TIDLOR), Utilities (GULF) and Transportation (AOT). | Daily top picks | CPALL: The company benefits from hot weather and the Songkran festival, which will stimulate sales volume. 1Q24 profit is expected to grow strongly YoY off higher sales and margin in the CVS business and higher contribution from CPAXT after its interest expense was slashed by refinancing from end-January.
BEM: Profit will recover the strongest of land transport peers and it also has more price catalysts, including a raise in MRT fares, expected to be announced by the beginning of June, conclusion of the West Orange Line project and the double-deck expressway in 2H24. | Today’s reports | Commerce – SSS revival starting in 1Q24
TRUE (High conviction) – Don’t take 1Q24F results wrongly!
PTTEP – Preview 1Q24F: Stable profit QoQ expected | | Click here to read and/or download file Daily240405_E |
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