สวัสดีตอนเช้า - 16 ก.ค. 2567 กรอบบนจำกัด ระวังพักตัว

The SET has a limited upper bound with resistance at 1335 and 1340, already factoring in hopes for an interest rate cut by the Fed in September to some extent. The SET has entered an overbought position and is pressured by worry over EA’s debt. The lower bound has support at 1320. A fall below this would be a negative indicator for resting.

• The retail and wholesale business sectors are showing signs of a sharp slowing, especially in the provinces and in small shops with limited resources. Nearly 2,000 factories have closed, dragging GDP below the 5% target. This reflects the fragility of Thailand's economic structure and the urgent need for adaptation.
• The Fed Chairman said at the Economic Club in Washington, D.C. that the Fed will not wait for inflation to reach the 2% target before starting to cut interest rates. He also doesn't expect the economy to face a severe downturn after its rapid expansion.
• Markets predict the assassination attempt on Donald Trump will give him the victory in the presidential election. This could lead to aggressive trade policies, tax cuts and widespread deregulation.
• China 2Q24 GDP grew 4.7%YoY, lower than market expectations and slowing from 1Q24's 5.3%YoY. June retail sales rose 2%YoY, the slowest since Dec 2022, indicating that government efforts to restore confidence have had little effect on increasing consumer spending.
• Tomorrow, there will be consideration of a draft bill for an additional FY2024 budget of Bt122bn for the digital wallet project. The first reading is expected to take one day, with two days for amendments, likely on July 19-20.
• IDC reports global smartphone shipments in 2Q24 increased by 6.5%YoY to 285.4mn units. Apple's shipments grew 1.5%YoY to 45.2mn units, boosted by price reductions and promotions in various regions.
• The economic cabinet is seeking ways to restore confidence and address household debt issues amid the economic downturn. It is also addressing informal debt via strategies similar to Pico Finance and offering licenses to encourage informal creditors to reform.
• The Prime Minister tweeted after a major digital wallet board meeting that identity verification registration for the digital wallet will begin on August 1, 2024 through a government app. Details will be announced on July 24 as scheduled, and the proposal will be submitted to the cabinet next week. Funding will come from the FY2024 budget.

In the short term, the SET is still fragile and has limited upside due to prolonged political uncertainty and continued uncertainty over the digital wallet; some support is expected from external factors, including 2Q24 results of US companies, which are expected to be strong despite a slowing US economy, weak China economy and ECB stance of keeping interest rate unchanged. Our strategy is “Selective Buy”. 

The Thai capital market still has limited upside and is waiting for clearer external factors. We recommend "Selective Buy" with four main themes:
1) Stocks whose 2Q24 profit is expected to grow YoY and QoQ and whose valuations are attractive - MINT, BEM, OSP, TU, KCE and CPF.
2) Stocks expected to benefit from short covering after the uptick rule started on July 1, also with strong fundamentals with SETESG Ratings between AAA and A - HANA, TOP, BEM, MINT, OSP, BBL, SCGP and AOT.
3) Stocks expected to benefit from the adjustment of ThaiESG conditions that will raise the maximum tax reduction to Bt300,000 and reduce the holding period to 5 years - ADVANC, CPALL, BDMS, BBL and GULF.
4) Brent price has recovered as there continues to be attacks on cargo ships in the Red Sea and attacks on energy infrastructure in Russia, although the Middle East conflicts remain fairly contained. We expect the price to be at US$80-90/bbl. Oil stocks are good as a hedge against risk. For high-risk takers, we recommend an upstream oil stock - PTTEP.

BTG: Profit is expected to turn around to profit of Bt574mn in 2Q24 and strengthen in 3Q24, growing QoQ on seasonality and YoY on rises in domestic livestock prices, which have hit a one-year high in 3Q24TD. The stock is also a proxy for the food sector, benefiting from gradually increasing domestic swine price in 2H24. Recommend buy at not higher than Bt23.00/share.
PTTEP: Stock price has risen more slowly than oil price and is considered as a hedge on the Middle East conflict. Profit and balance sheet are solid. 2Q24 profit is expected to be strong at Bt21bn, supported by higher sales volume and stable ASP.