Weakening on concern over the vote for PM. |
| Market today |
The SET is expected to weaken, pressured by concerns over the vote for PM next week, leading to greater selling to avoid risk after a climb up in the SET. Supports are at 1,495 and 1,479. If it falls below the lower end, indicators are poor. The upper bound is limited at 1,515-1,520. |
| Today’s highlights |
• The Fed Minutes said most of the committee expects to raise rates again this year after no change in June. • US factory orders in May increased for the fifth straight month but less than expected. • China services PMI in Jun fell MoM, the slowest growth in five months. • WMO warns that El Nino has officially begun, increasing the probability temperatures to rise to new highs with very hot weather in many areas across the world and in oceans. • The Ministry of Commerce reported Thai inflation in June of 0.23%YoY, slowing for the sixth straight month to a 22-month low on lower goods and energy prices. • JSCCIB kept its 2023 GDP forecast at 3.0-3.5% but cut 2023 export growth forecast down to -2-0% in view of a slower world economy in 2H23, a slowdown in the service sector in leading economic countries such as the US, EU and Japan, and lowered its inflation forecast to 2.2-2.7%. • The House Speaker has set the date for the PM vote for Jul 13. If voting cannot be wound up on that date, another vote will be scheduled and new candidates may be presented. |
| 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 |
ADVANC: Competition in the mobile phone market is gradually improving. 2Q23 profit is expected to return to growth both QoQ and YoY, and ADVANC intends to pay an interim dividend, estimated at Bt3.5/share.BEM: The full opening of the Yellow Line will be a short-term catalyst to stock price, while 2Q23 and 3Q23 profit will improve QoQ and YoY from higher expressway traffic and more MRT passengers. It will also record dividend income from TTW and CKP. |
Today’s reports |
AEONTS – 1QFY23: Big miss on ECLsTU – Preview 2Q23F: Another weak quarter |
