ท่านสามารถอ่านและดาวน์โหลดเอกสารได้จาก Daily231214_T To recover, but overall outlook is dim |
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Market today | The SET is expected to recover as the Fed signalled a cut in interest rate in next year. However, technical indicators are negative after the index made a new low for the year, limiting any recovery, with resistances at 1370 and 1380. There remains downside, with supports at 1348 and 1340. | Today’s highlights | • The Fed maintained its interest rate policy at 5.25–5.50%, the highest in over 22 years. It did signal the possibility of three steps down in interest rates in 2024, each step at 25bps for a total reduction of 75bps. This is more than the two rate cuts suggested at the September meeting.
• Leaders from over 200 countries participating in the COP28 meeting reached a consensus on transitioning from fossil fuel and coal-based energy to renewable, nuclear, and CCUS (carbon capture, utilization and storage) energy sources. They anticipate a peak in pollution emissions in 2025.
• The Japanese government is preparing a 10-year tax incentive scheme to stimulate major production in five sectors, including EVs and semiconductors.
• ADB has revised its GDP forecast for developing countries in Asia to 4.9% in 2023, up from 4.7%, in response to China's economic recovery. The GDP forecast for the next year remains at 4.8%.
• BoT expects inflation to decrease temporarily and then rise again in 1Q24. Inflation is anticipated to return to the target range of 1-3% in 2024. The Thai economy is projected to continue its recovery, though exports may rebound slower than expected. The number of tourists is expected to return to normal trends in 2025, especially with the recovery of non-China tourist groups.
• The Prime Minister announced plans to increase the share of renewable energy in the country to 50% from 28% within five years, and will include this in the next Power Development Plan (PDP) to be announced next year. Discussions are underway with Laos to purchase all its electricity output, shifting from the current arrangement where electricity is transmitted through Thailand to Singapore.
• JSCCIB led a delegation of over 34 Thai businesspeople from various high-potential sectors to visit Saudi Arabia, aiming to increase bilateral trade value by 20% year-over-year in 2024. | Strategy today | In the short term the Thai capital market may be more volatile as monetary policies will not tighten (interest rates have peaked, and FOMC, BoE and ECB monetary policy meetings this week are expected to leave rates unchanged), offsetting slowing economic data. Therefore, the SET is seen to be in an environment of selective investment in stocks with specific drivers with fund inflow expected from TESG funds in December. Our strategy is selective buy. | Trading today | Weekly portfolio: The SET is focused on selective investment in stocks with specific drivers and probable fund flows from TESG funds in December. We recommend “selective buy” in themes with specific drivers:
1) Big-cap stocks in SET50 expected to be selected as investment targets as the TESG fund is set up. We use two criteria to select stocks in the SETESG index: 1) ESG rating of “AAA” or “AA” and 2) prices are down more than the SET YTD – SCGP, OR, CPALL, BEM, GULF, CRC and HMPRO, we also suggest a stock with ESG rating of “A” and down more than the SET YTD – AOT.
2) Big-cap stocks in SET50 placed in the SETESG with a rating of “AAA” and outperforming the SET YTD, with strong profit and dividend yields greater than 5% - PTT and KTB.
3) Those looking for long-term dollar-cost-average (DCA) investment as we see it as best after a sharp drop in the SET, as risk is low and stock prices are undervalued; on this theme we recommend BBL, BDMS, BEM, CPALL, PTT and SCC, all SET100 stocks and leaders in their industries. They are also included in the SETESG index with ESG rating of “AAA” or “AA” and valuations are below 10-year historical mean with steady profit.
In the short term we recommend being cautious on stocks that are expected to be materially affected by the planned raise in the minimum wage, set to be discussed in the Dec 12 cabinet meeting: Courier Services (KEX), Food (CPF, ZEN, GFPT and TU), Real Estate (LPN and PSH) and Electronic Components (HANA). 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).
Special Report: Take a look at our Thai language Yearbook 2024 “A Year of Value Investing”, highlighting a very undervalued Thai capital market that is offering a good opportunity for long-term investment with 10 selected top picks for 2024. | Daily top picks | GPSC: Listed on the SETESG Index with an “AA” rating. In the short term there is a plus from the drop in US bond yield and low natural gas cost, while the company is in the process of adjusting electricity sales contracts for industrial customers to be based on gas price, which will help reduce the volatility brought by changes in Ft, which does not align with cost.
BDMS: Listed on the SETESG Index with an “AA” rating. 4Q23 core profit is expected to grow YoY, with 12% core profit growth in 2023 and 8% in 2024 on rising foreign patients, more revenue from excellence centers and better asset utilization. | Today’s reports | KTB (High conviction) – Cheap valuation, low risk, good yield | | | Click here to read and/or download file Daily231214_E |
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