| Little upside. Hot technical indicator. |
| Market today |
Little upside is seen for the SET with resistances at 1,565 and 1,570 and a hot technical indicator and entering the overbought zone, while politics remains uncertain. Key to follow is the PM vote on Aug 4. Support is at 1,543, and a fall below this brings next support at 1,530. |
| Today’s highlights |
• US manufacturing PMI by ISM in Jul contracted for the ninth consecutive month; US final manufacturing PMI by S&P global also contracted in July, while JOLTS in June reached a 2-year low.• Grain prices in the world market declined on expectations of good crop weather around the US Midwest and no attack by Russia in the Black Sea.• 2Q23 GDP in the Eurozone grew, beating expectations of 0.6%YoY and 0.3%QoQ. CPI in Jul was 5.3%YoY, down from 5.5%YoY in Jun.• China’s government announced stimulus for consumption in automotive, real estate and services sectors.• GS raised its forecast on world oil demand to reach a record high of 102.8mn bbl/day, while world oil supply is expected to decline by 1.8mn bbl/day in 2H23 and 0.6 mn bbl/day in 2024.• The MPC is expected to raise interest rate by 25bps today as signaled, viewing inflation risk as higher in 2H23.• The BoT sees three risks: the uncertain world economy, unstable politics and the high cost of living and its effect on the lowest earnings. It also said the agricultural sector may be damaged by a drought, while exports may recover by year’s end.• TAT expects tourists in 2023 to reach target, but expects lower revenue generated in 2023 at Bt2.167tn, 8.9% below target as most of tourists are short-haul and the number of flights is significantly lower than pre-COVID 19. |
| Strategy today |
The SET is expected to be range-bound as it waits for the formation of a new government as well as the onset of the 2Q23 earnings season. The MPC meeting on Aug 2 is expected to raise interest rate another 25bps. The market is watching external factors of Chinese and US economic data and 2Q23 operating results, which are expected to show signs of recovery in the second half of the year. We recommend “Selective Buy”. |
| Trading today |
Weekly portfolio: The SET is waiting for clarification about politics and watching 2Q23 earnings reports, both at home and abroad. We recommend “selective buy” in themes with positive drivers: 1) Stocks whose 2Q23 operating results are expected to continue growing YoY and QoQ – ADVANC, BEM and GULF, and for speculation, stocks whose 2Q23 profit is expected to beat market expectations – AOT and MINT. 2) Stocks whose profit is expected to bottom in 2Q23 and gradually climb QoQ and YoY in 3Q-4Q23 – ERW, PTT, OSP and KCE.In the short term we recommend avoid investment in: 1) stocks whose 2Q23 profit is expected to be weak and may be subject to downgrades, specifically in Food (TU, CPF GFPT and BTG) and Securities (ASP and MST), and 2) stocks expected to be affected by El Nino, which will erode purchasing power in the agricultural sector: Commerce (GLOBAL), Finance (MTC, SAWAD), Automotive (SAT, STANLY), Beverages (CBG, where sugar plays a leading role in cost), Hydropower (CKP) and Food & Agriculture (CPF and GFPT). |
| Daily Focus |
ADVANC: Overall competition in mobile phone business is steadily cooling down. 2Q23 profit is expected to recover QoQ and YoY. It is expected to pay an interim dividend after releasing 2Q23 results, expected at ~Bt3.5/share.OR: Although 2Q23 profit is expected to decline QoQ on lower sales volume due to seasonal factors and lower marketing margin, 2H23 is expected to recover YoY and 2023 profit is expected to grow by 31%YoY off a recovered marketing margin and lower expenses. |
Today’s reports |
Petrochemicals – Product spreads remain bleak OR – Preview 2Q23F: Expect a small slip QoQ PTTEP – 2Q23: Slightly above estimates |
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