• A further pullback could be on the way for Thai stocks today amid bearish overseas and domestic cues but the downside however appears limited with support pegged at 1345-1365 points. In the spotlight today will be (i) the telecom sector amid a lack of clarity over 4G and (ii) the banking sector after continued sharp losses in the wake of the cuts in MLR which would cut into NIM. In addition, watch out for a possible bout of profit-taking by proprietary traders on risk aversion ahead of the long Songkran holidays after YTD cumulative inflows remain high at up to Bt13,961mn.
• In our view, any big dips should be seen as a buying opportunity. Historical statistics show around 14.2x forward P/E, equivalent to the current SET index level of 1325 points is normally a trigger point for institutional investors to re-enter the market, a factor that should move the market back higher.
• US stocks retreated on Thu amid concerns that negative rate policies adopted by ECB and BOJ might not be a success story against the backdrop of the still fragile state of the global economy.
• For short-term strategy, any dips should be taken as an opportunity to accumulate positions.The focus would remain on the beneficiaries of the government’s policies i.e. tax cheer for Songkran and mega-investment projects. Equity holdings should be kept at 40%-60% of the portfolio.
(1) Tourism recovery play: Let profits run on long positions in CPALL and SPA and add more long positions in AOT to bet on a rebound after an overdone share price correction despite a sunny tourism picture.
(2) Momentum trade: Go long JAS and CK for speculative trading after share price run-up, bucking a sharp fall in the broader market and supported by volume. For CK, government mega-infrastructure theme should also lend a further support to the share price.
Source: poems.in.th / settrade.com
