Although the mood was positive after the Fed chairman’s speech to Congress created hopes of an interest rate cut in September, an overbought signal and investors waiting for US CPI tonight limit upside with resistances at 1330 and 1335, while support is between 1310-1315.

• The Fed chairman signaled a potential interest rate cut soon, noting the Fed's focus on a slowing labor market and willingness to cut rates before inflation reaches the 2% target.
• EIA reports US weekly crude oil stocks decreased by 3.4mn bbl, more than the market expected. Hurricane Beryl had a minimal impact on oil supply, especially in Texas, which produces over 40% of US crude oil supply.
• The Philadelphia Semiconductor Index was +2.4%DoD, reaching a record high after TSMC reported higher-than-expected 2Q24 revenue, benefiting from AI technology demand.
• The Ministry of Finance cut the digital wallet budget to Bt450bn, using funds from only the FY2024 and FY2025 budgets without BAAC funds. It also added three items to the list of items not covered: electrical appliances, electronics, and mobile phones.
• The Ministry of Finance plans to discuss LTV criteria review with the BoT, as high NPLs significantly pressure real estate sector growth. It is considering proposing 99-year land ownership for foreigners to boost market recovery.
• The Excise Department said 14 EV manufacturers must produce 180,000 vehicles to compensate for imports during 2022-2025 under the EV 3.0 subsidy measure. The Thai EV Association has expressed concern over potential market oversupply due to high household debt and loan rejections.
• The Constitutional Court scheduled the next hearing on the Prime Minister's qualifications case for July 24, citing the need for additional information and awaiting opinions and evidence from relevant individuals and agencies.

In the short term, the SET is still fragile and range-bound due to prolonged political uncertainties. The market is expected to be supported by external factors as the Fed is likely to signal an easing in monetary policy after US CPI slowed in June to 3.1%YoY from 3.3%YoY in May as well as slowing job market figures. Our strategy is “Selective Buy”. 

Thai capital market is seen to still be fragile and range-bound while waiting for some political clarity and a new catalyst. We recommend "Selective Buy" with four main themes:
1) Stocks expected to benefit from short covering after the SET implemented the uptick rule on July 1 and which also have SETESG ratings between AAA to A - HANA, TOP, BEM, MINT, OSP, BBL, SCGP and AOT.
2) Stocks expected to benefit from changes in conditions for the ThaiESG fund: raising deductions to up to Bt300,000 and reducing the holding period to five years - ADVANC, CPALL, BDMS, BBL, BEM and GULF.
3) Global plays whose profit is expected to grow and which benefit from global economic recovery over domestic plays, which face multiple uncertainties -SCGP, TU and MINT. (We recommend buy SCGP on price dips when pressured by weak Chinese economic figures.)
4) Tension has eased about the situation in the Middle East, leading Brent down to the lower bound of US$80-90/bbl, which is seen as an opportunity to hedge. For high-risk takers, we recommend an upstream oil stock - PTTEP.

HANA: 2Q24 profit is expected to recover, followed by high growth in 2H24 off the replacement trend for AI smartphones; as well, the RFID and PMS businesses are not expected to be affected by rising copper and gold prices as they are able to pass higher costs on to customers. It also has limited impact from a rise in minimum wage. We recommend buy at not higher than Bt48.00/share.
TOP: The company benefits from rising oil price and the recovery of refinery margin from bottom, supported by seasonal demand for gasoline and jet fuel. Aromatics are also expected to improve from stronger product price spread, supported by tight supply in Asia. Recommend buy at not higher than Bt53.25/share