• Oil up: Crude oil prices jumped by as much as 3% on Tue after the API reported a surprise draw in US crude inventories last week. Rising oil prices should give energy shares a shot in the arm today. However, we believe oil may not keep its strong upward momentum going ahead after prices had gained by 10% since the latest meeting of major oil producers in mid-Apr while the overall global and Chinese economies remained clearly in a slowdown mode.
• Eyes on US FOMC & BOJ policy decisions: We believe the Fed may not be in a hurry to make its second rate hike at this policy meeting but its view on China and Europe’s economies and oil prices may be worth watching as these issues would be one of the key factors in its decision making to pull the trigger on its next rate hike. On the other hand, the BOJ will likely continue to pursue its monetary easing policy.
• Unusually high levels of cumulative inflows from proprietary traders: YTD cumulative net inflows from proprietary traders topped Bt16bn. Typically proprietary traders make highly speculative short-term trades and no such huge cumulative inflows have ever been seen before. Data over the past 5 years showed proprietary traders took profits on positions after a huge amount of cumulative net purchases and a sharp market correction later ensued. For this reason, Thai stocks may be at risk of a correction after the market’s valuation is no longer cheap at 15.17x forward P/E and if earnings fall short of expectations.
• Earnings speculation: SCC is due to release its lackluster quarterly results today. Despite dull earnings, bullish oil sentiment should lend support to the broad market. The SET index is expected to trade in a range of 1410-1425 points today ahead of key overseas policy decisions.
• Short-term strategy: Selective play will do well in current market conditions. Equity exposure should also be kept at 60% of the portfolio.
(1) Tourism recovery play: Hold onto AOT, CPALL and SPA shares.
(2) Selective play: Hold onto MAJOR shares on the release of the big-ticket Hollywood film Captain America 3 in Thailand today, of which revenue is likely to exceed target like other superhero movies.
Source: poems.in.th / settrade.com
