Decline. Politics is heated, Externals are negative. |
| Market today |
The SET is expected to be pulled down by negative technical indicators and a shift in politics giving rise to concerns of protests as well as external factors after the US’ credit rating was downgraded. Supports are at 1,543 and 1,530; the upper bound is limited with resistances at 1,555 and 1,563. |
| Today’s highlights |
• Today watch to see if the Constitutional Court will accept a case filed by the ombudsman. Yesterday the Phue Thai Party cancelled the MOU between the eight parties to give it more flexibility to bring in other parties to improve the chances of forming a government.• The MPC unanimously raised interest rate by 25bps to 2.25%, a 9-year high, and signalled the end of the move up in interest rates. It will focus on getting inflation into a target bound along with stabilising long-term monetary stability.• JSCCIB kept 2023 GDP target at 3.0-3.5%, with exports contracting 2% to 0% and inflation between 2.2-2.7%. It expressed concerns that the delay in formation of a government will affect the budget, aggravating the effect on the economy of slow exports and drought.• US ADP nonfarm employment in Jul increased by 324,000, well above the expected increase of 175,000.• US Treasury Secretary disagrees with Fitch on the cut in the US credit rating to AA+ due to fiscal recession and increasing government debt burden, saying it used outdated information.• EIA reported a decrease in US crude oil inventory of 17 mn bbl last week, far more than the 1.4 mn bbl decrease expected, but oil price is being pressured by Fitch’s credit rating cut and the US government’s cancellation of the purchase of 6mn bbl of crude oil to fill strategic reserve on expectations oil price will continue to rise.• China’s government announced 20 packages to stimulate tourism, EV and smart appliances, while the Ministry of Finance prepares to extend the cut in VAT for small and family businesses to 2027 and cut income tax on sales to 1%. |
| Strategy today |
The SET is expected to be range-bound as it awaits the formation of a new government as well as the onset of the 2Q23 earnings season. The MPC raised rate another 25bps at its meeting on Aug 2 as expected. The market is watching external factors of Chinese and US economic data and 2Q23 operating results, with signs of recovery expected 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 |
CPALL: 2Q23 core profit is expected to grow YoY and outperform the sector, supported by higher sales volume at CVS and CPAXT, but decline QoQ due to seasonal factors. 2H23 profit is expected to improve HoH from lower financial cost after refinancing CPAXT debt at the end of April.ADVANC: Overall competition in the 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. |
Today’s reports |
Finance – Preview 2Q23F: Rising credit costMST – 2Q23: In line; moderate dividend yield |
