| Bet on a shift in politics, breaking 1,520. |
| Market today |
The SET has risen to close in on a previous high of 1520 and may break through, supported by political factors, with a shift expected, and hopes the Fed will end the upward interest cycle. Resistance is at 1,534, while supports, which are expected to stand, are at 1,506 and 1,494. |
| Today’s highlights |
• The Ministry of Finance said it is necessary to reform tax to increase government revenue and has proposed 20 new tax packages for consideration by the new government, for example, adjusting tax reduction, which is overly high, adjusting the allowance for the elderly, since the wealthy are also getting this, and adjusting the form of collection of taxes on stock holdings, which is ready to be implemented. The FY2024 budget is expected to be delayed by 6 months, affecting 0.05% of GDP. It suggests hurrying to create an emergency budget of Bt630bn to support the economy. • Economists worry El Nino will pull down the economy. EIC expects it to cut GDP by Bt40bn or Bt60bn if the damage is extended. The NESDC worries it will bring a repeat of the drought crises in 2015 and 2019, causing GDP to contract by 6.5%. • US Consumer Confidence Index in July by the University of Michigan showed a greater increase than expected, to the highest since Sep 2021. • 2Q23 profit of 3 large banks, JP Morgan, Citi and Wells Fargo, beat estimates, generating total profit of Bt2.23bn in the last quarter and growing YoY. • The Hong Kong stock market has announced a postponement in market opening today after the warning of Typhoon Talim was raised to level 8 until noon today. • There is a report of a halt in an oil field in Libya due to unrest in the country. Shell has suspended delivery of oil in Nigeria due to leaks in the oil storage station. |
| Strategy today |
In the short term the SET is pressured, mainly by politics as the new government is still unformed. Concerns from external factors – a slowdown in the global economy and monetary policy - have begun to ease to some extent. We recommend “Defensive and Selective Buy”. |
| Trading today |
Weekly portfolio: Investors are waiting for clarity on politics, affecting the SET. We recommend “selective buy” in themes with positive drivers: 1) Stocks whose 2Q23 profit is expected to grow YoY – BBL, ADVANC, OSP, BDMS and BEM. 2) Stocks with strong fundamentals that are seen as having high dividend potential with 2023 dividend yield of over 5% - TISCO, LH and AP. 3) For investors who can handle risk, recommend speculate in stocks in case the political scene shifts – GULF, GPSC, CPALL, SIRI and SC. 4) A fall in the SET to 1,450 is seen as an opportunity to buy stocks whose prices have fallen deeply and have been trading at PER and PBV of below -1SD – CRC, SCGP and OR.In the short term we recommend avoid investment in: 1) Food (TU, CPF GFPT and BTG), which is seen by the market as likely to be downgraded as 2Q23 profit is expected to weaken QoQ and YoY; 2) stocks expected to be affected by El Nino in 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) and 3) Tourism stocks that may be negatively affected by politics. |
| Daily Focus |
GULF: In the short term the company benefits from lower bond yield. 2H23 core profit is expected to grow YoY and HoH from new generation capacity at IPPs (1,325MW), which have plans to COD in Mar and Oct 2023 and profit share from a gas power plant that will be recognized as revenue in Mar 23.CPALL: 2Q23 core profit is expected to grow YoY on better sales at the CVS business and CPAXT, but to decline QoQ due to seasonal factors. 2H23 profit is expected to grow HoH from lower interest expenses after finishing refinancing CPAXT’s debt at the end of April. |
Today’s reports |
No InnovestX Equity report today |
