Expected to recover, see a catalyst
Initially, the SET may face negative sentiment after the Fed Chairman’s speech signaled a cautious view and no hurry to cut interest rate. However, the index will be able to stand at support of 1440, creating a positive technical sign. The government is expected to announce stimulus after its Nov 19 meeting, which will be a catalyst. Resistances are at 1460-1465. A break above would be a clear sign of recovery.
Today’s highlights
- Google forecasts Thailand's digital economy to reach US$46bn in 2024, making it the second largest and fastest-growing country in SE Asia (after the Philippines), driven by e-commerce growth and online tourism. Thailand is positioned as a regional leader in AI and Data Center investments.
- The UTCC reported the Consumer Confidence Index for October 2024 at 56.0, rising for the first time in 8 months. However, it is still below 100, indicating most consumers remain concerned about the economy. Markets are monitoring economic stimulus measures and Trump's policies.
- The Fiscal Policy Office expects 4Q24 GDP growth at 4.3-4.4%, supported by the Bt10,000 handout program. The Minister of Finance says phase 2 of the handout will target seniors aged above 60 who are not in the vulnerable groups but face liquidity issues.
- Last night, the Fed Chairman signaled no rush to cut interest rates, citing strong US economic performance and inflation not yet reaching the 2% target despite significant recent declines.
- South Korea reports technology product exports grew for the 12th month in October, including ICT products, semiconductors, and computer peripherals, driven by chip demand for Generative AI applications.
- IEA has issued a report warning of oil market oversupply, saying global crude oil supply will exceed demand by approximately 1 MMBpd in 2025, as the US and non-OPEC+ countries increase production.
- CNN reports that the Republican Party now holds complete control of both the White House and Congress, which will enable Donald Trump's policies to be implemented more quickly and effectively.
Strategy today
Although in the short term the SET is expected to move sideways-up due to limited overseas and domestic pressure, US inflation is expected to slow down, which suggests interest rates will continue to come down. The passage of the US election is expected to support continued improvement in the market. Expectations of the impact of policies from the new US government on macroeconomics will cause the market to be more volatile and may affect fund flow direction, especially policies related to China. Domestically, the market is expected to be driven by the final week of 3Q24 earnings reports. Our strategy is “selective buy”.
Trading today
In the short term the SET is expected to move sideways up due to weaker pressure, both overseas and domestic. The market is expected to be driven by the final week of 3Q24 earnings reports. We recommend “Selective Buy” with four main themes:
- Earnings plays: stocks for speculation in the final week of 3Q24 earnings reports, on which we rate Outperform with strong fundamentals and 3Q24 profit – AWC, BDMS, CPALL, BEM and AOT.
- Stocks that benefit from Trump’s win – AMATA and WHA (tax wall, manufacturing relocation), and CPF AOT and MINT (cut in revenue tax, higher purchasing power, benefit from dollar appreciation).
- Stocks with high dividend yield and expected to be targets of the Vayupak and tax-deductible funds (SSF, RMF and ThaiESG) and with following characteristics: dividend yield of at least 3.5%, high SETESG ratings and high CG and earnings expected to grow - BBL, ADVANC, HMPRO and BCP. Recommend to buy on dip as prices have already moved up.
- For investors who are concerned about tension in the Middle East and want oil stocks to hedge the risk, we recommend an upstream oil stock – PTTEP.
Daily top picks
CPF: 3Q24 net profit was higher than expected due to an extra item, while core profit was in line at Bt6.6bn, supported by strong meat prices, lower animal feed cost and expense control. 2024 profit is expected to turn around to core profit of Bt14.9bn. It also has the highest upside from the upcoming steps down in interest rate cut. Recommend to buy for trading at not higher than Bt24.70/share.
CPAXT: A player in the Commerce sector that will benefit strongly from additional stimuli. 4Q24 profit is expected to be this year’s peak, growing QoQ on seasonality and YoY from higher sales and margin. After the M&A, synergy will start to take place in 4Q24 and will be clearer by the middle of 2025.
