More choppiness could be in store for Thai stocks after testing a key 1400-point barrier today. Much of the investors’ attention may now be shifting to earnings as the first-quarter earnings season is just around the corner. In the oil market, crude oil prices rebounded after a Kuwaiti oil industry strike. In our view, Thai stocks are no longer cheap after the SET index’s FY16 forward P/E has climbed back to 15x but we believe earnings plays may support the market’s downside. The trading range for the SET index is expected to be between 1385-1410 points today.
US stocks closed higher on Mon as the market danced to earnings tune and the boost also came from a rebound in crude oil prices after the Kuwaiti oil company estimated that a strike in Kuwait by oil workers might take around 1.1mn bpd off global oil supply.
In Thailand, institutional and foreign buying lent support to Thai stocks on Mon but we stick to our view that institutional inflows may slow down after the SET index’s FY16 foward P/E has climbed back to 15x. However, it seems to us that earnings plays may support the market’s downside after bank earnings season kicked off with in-line results.
The short-term strategy is to buy the dips and sell the rallies within the above trading range. The focus should be largely on shares of companies that are expected to benefit from the government’s policies and/or report impressive 1Q results. Equity holdings should be kept at 40%-60% of the portfolio.
(1) Tourism recovery play: Hold onto AOT, CPALL and SPA shares as the overall tourism outlook remains rosy but adjust the short-term target for SPA down to Bt8.80.
(2) Momentum trade: Hold onto CK shares.
(1) Tourism recovery play: Hold onto AOT, CPALL and SPA shares as the overall tourism outlook remains rosy but adjust the short-term target for SPA down to Bt8.80.
(2) Momentum trade: Hold onto CK shares.
Source: poems.in.th / settrade.com
