May switch to rest, overall is still good |
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Market today | The SET did not break through resistance at 1,420-1,422, which technical indicators suggest may switch it to a rest. However, signals as a whole are good with supports at 1,410 and 1,400, which are expected to stand to continue recovery. If the index can break through 1,422, signs will be good, with next resistance at 1,432. | Today’s highlights | • The US is imposing sanctions this week on Russian shipping companies and oil tankers that are pricing oil above the G7 ceiling.
• The meeting between Presidents Biden and Xi Jinping has improved the atmosphere between the two countries, but there was only small progress in restoring relations.
• President Biden signed the temporary budget bill, enabling the United States to avoid a government shutdown.
• The Panama Canal may limit the number of ships passing through due to drought conditions, potentially increasing global transportation costs. Additionally, the price difference between European and Asian LPG has increased due to record delays in gas transportation.
• Corn futures fell by more than 1.6%, with an expected increase in production in Brazil following rainfall in planting areas. Wheat futures hit a three-year low as Russia continued to export large quantities of cheap wheat, and US weekly wheat exports were lower than expected.
• CAAT reports that nine airlines have registered new services, supporting a steady recovery in Thailand's aviation industry. Thai airlines remain financially sound, with an estimated 127mn passengers by the end of the year.
• REIC says the demand for housing fell 7% YoY in terms of units and 2.6% YoY in transfer value across Thailand in 3Q23. This is due to lower purchasing power, particularly those looking for mid to low-priced housing. | Strategy today | The SET is expected to see a steady recovery, backed by recovery in Thai exports and 3Q23 GDP figures, and positive sentiment from an expected Bt10bn in funds flowing into TESG by the end of the year. In addition, US manufacturing figures are expected to be strong although there is some indication of a slowdown. Our strategy is selective buy. | Trading today | Weekly portfolio: Although the Thai stock market is still facing high volatility, in the short term the SET may recover, though upside is limited. We recommend “selective buy” in themes with specific drivers:
1) Big-cap stocks in SET50 expected to be selected as investment targets for the TESG fund being set up for long-term stimulus. We select stocks in SETESG with factors of interest: 1) ESG Rating of “AAA” or “AA” and 2) prices have declined more than the SET YTD – SCGP, OR, CPALL, BEM, GULF, CRC and HMPRO
2) Earnings plays whose 4Q23 earnings are expected to grow YoY, making it the year’s best quarter – ERW, AOT and AP.
In the medium term we recommend being cautious on stocks that are expected to be affected by El Nino, which will erode purchasing power in the agricultural sector: Finance (MTC, SAWAD), Automotive (SAT, STANLY), Food & Agriculture (CPF GFPT and GFPT) and Beverages (CBG has high sugar cost). | Daily top picks | GPSC: 3Q23 profit was better than expected due to lower fuel cost and it will get a short-term push from declines in US bond yield, EU natural gas price (TTF) and Asia LNG price (JKM). It is also included in SETESG index with rating of “AA”.
PTTEP: In the short term the company will benefit from rising crude oil price after the US has boycotted Russian crude oil tankers. Management expects sales volume to grow 2-3% QoQ in 4Q23 and 10% in 2024. It has been included in the SETESG index with rating of “AAA”. Recommend buy for speculation at under Bt160/share. | Today’s reports | BTS – 2QFY24: Back to profit, clarity on BMA debt
PTTGC – Staying afloat on rough seas
SAWAD – Greater caution over asset quality |
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