Downside likely to be limited at 1,500 |
| Market today |
The SET is expected to rise as sentiment will be supported by recovery in US stock markets and further progress in formation of a new Thai government. Mood will brighten it today’s vote for PM is smooth. We assign resistances at 1,530 and 1,540, supports at 1,520 and 1,510. Standing above supports would be a good sign. |
| Today’s highlights |
• Yesterday, the Pheu Thai Party announced collaboration with 11 parties to form a government giving it 314 votes. It is proposing Mr. Sathaporn Taveesin from the Pheu Thai Party as prime minister. Today’s vote may make him Thailand’s 30th prime minister.• The NESDC reported Thai GDP growth of 1.8%YoY in 2Q23, slowing from 2.6% in 1Q23. Exports have shrunk for three consecutive quarters. The 2023 GDP forecast has been revised to 2.5-3.0% from 2.7-3.7% to accommodate the delayed government formation, lower-than-expected tourism revenue and a further reduction in export projection of -1.8% from -1.6%.• Fitch Ratings noted that Thailand's major banks continue to benefit from recovering revenue, improving business volume and the upward interest rate environment. Their liquidity and loss-absorption capacity remain relatively strong.• The Rubber Authority of Thailand says that El Niño will affect major rubber-producing countries—Thailand, Indonesia, Vietnam, and Malaysia—and will likely reduce rubber production by 2% through 2525.• Fitch Ratings warned of a possible review of China's creditworthiness, currently rated A+, following an increase in China's debt-to-GDP ratio.• S&P has downgraded the credit ratings of five small US banks due to negative impact from high non-performing loans and outflow of deposits.• A strike at an LNG plant in Australia could start as early as Sep 2 if wage agreements are not reached. This could cause wholesale gas prices in Europe to rise since Australia is one of the world's largest LNG exporters. |
| Strategy today |
The SET continues to move within the range of 1,500-1,550. If the PM vote today ends up giving the country a prime minister, there is a possibility the SET will test the upper range of 1,550-1,560. Fund flows are expected to start to move inwards. However, the global stock market investment atmosphere in the short term is anticipated to remain pressured by concern over the slowdown of the US and Chinese economies. Investors are watching the statement from Fed Chair Powell during the Jackson Hole Symposium (August 24-26) for indications of the direction of US interest rates. This limits SET upside. The investment strategy is for "Selective Buy". |
| Trading today |
Weekly portfolio: The SET is seen to have limited upside. While there is progress in domestic political factors, the market remains pressured by risks associated with the global economic slowdown. The investment strategy is “Selective Buy” as follows: 1) Highlighting eight standout stocks across four industries where earnings are expected to grow both HoH and YoY - PTT, BCP, KCE, HANA, BDMS, BCH, AOT, and ERW. 2) Stocks paying an interim dividend on 1H23 profit with ~2% yield – SPALI (XD on Aug 22), LH (XD on Aug 24), HTC (XD on Aug 24) and AH (XD on Aug 29). 3) For risk-tolerant investors seeking to speculate, choose stocks that are expected to benefit from returning fund flow - KBANK, GULF, CRC, and HMPRO.In the short term we recommend avoid investment in stocks that are 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), and Food & Agriculture (CPF and GFPT). |
| Daily Focus |
KBANK will benefit from fund flows brought back by clearing in the local political scene. 3Q23 profit is expected to slip QoQ due to increased provisions and lower gain on financial instruments and be stable YoY. 2023 profit is projected to grow by 102%.KCE believes its performance has passed its lowest point. 2H23 profit is expected to grow on the expansion of production capacity for special grade PCB products, which have significantly higher margins, and lower costs, particularly for copper and electricity. |
Today’s reports |
TIDLOR – B/S cleanup, loan growth slowing |
