Limited short-term upside. |
| Market today |
Upside is seen as limited with resistances at 1,520 and 1,527 and hot short-term technical indicators. An important issue to follow is the vote for the Prime Minister next week. The index is expected to rest in a bound, if it does not fall below a short-term support at 1,495-1,506. If it falls below, indicators would be negative sign to vertical resting. |
| Today’s highlights |
• The US plans to impose a ban on giving Chinese companies access to cloud-computing services to counter China, which controls exports of important metals for semiconductors, telecommunications and EV industries. • TNSC cut its 2023 export forecast from growth of 0-1% to -0.5-1% as economies in trading partners slow down. Exports are expected to grow in 2H23. • The BoT reported a decline in the hospitality confidence index in June from May due to low season which led to a decline in the number of foreign tourists. 3Q23 is expected to be stable relative to 2Q23. It is proposing the government cut utility bills, provide tax support and set minimum wage standards according to the economy of each area. • TAT expects the tourism sector to underwrite Thai economic growth and expects foreign tourists to reach 30mn in 2023, or not below its earlier target of 25mn. Thai tourists have reached 117-135mn trips. • JSCCIB and TNSC responded to the parliamentary vote for Mr. Wan Muhamad Noor Matha as House Speaker, saying it was a good sign and will generate private sector confidence. It a PM can be elected, the government may be formed within August. A delay is expected to affect confidence and the economy may stumble. Malaysia’s palm oil stock rose to a 4-month high. |
| Strategy today |
Even though the SET is likely to recover, upside is limited due to domestic risks, particularly with regards to politics: the opening of Parliament on July 4, fund outflows from financial markets that are weakening the baht, which affects investment in large-caps, and external risks such as concerns that central banks are signalling a continued rise in interest rates, which may bring on a global recession. We recommend “Selective Buy”. |
| Trading today |
Weekly portfolio: External and domestic risks continue to pressure, limiting the SET’s upside. We recommend “selective buy” in themes with positive drivers: 1) Stocks whose 2Q23 profit is expected to grow YoY – AOT, BBL, ADVANC, MINT, 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) Stocks able to step back up a month after the sharp fall since the May 14 general election – BH, BTS, CHG and CPALL. 4) Stocks expected to benefit from a weakening baht – AH, NYT and ERW.In the short term we recommend avoiding investment in: 1) power plants and PTT group stocks as there is risk of a change in the energy price structure in the new government’s policies, and 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 & Agricultural (CPF and GFPT). |
| Daily Focus |
HMPRO: 2023 profit is expected to grow 14%YoY from strongly growing SSS, aggressive branch expansion and higher margin. Profit is expected to grow each quarter through the year on seasonal factors, with little downside risk from changes in government policies.BBL: 2Q23 profit is expected to grow 56%YoY and 8%QoQ, the most outstanding growth in its sector, supported by lower provisions, higher NIM and the most benefit from the upward interest cycle with lower quality asset risk than other banks. |
Today’s reports |
Petrochemicals – Spreads rise QoQ in 2Q23 off low basePTTEP – Preview 2Q23F: Still rock solid |
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