• US stocks closed higher on Wed, bolstered by a more than 5% rise in WTI oil prices. The oil rally was driven by (i) a drawndown in US crude inventories, which meant less supply and (ii) a remark from Kuwait’s OPEC governor that a meeting of oil producing countries on Apr 17 would deliver an agreement to freeze output despite Iran’s aim to raise supply, which might not be a big worry as Tehran could find it difficult to sell its oil due to low demand for the heavy grades it mostly offered. However, a close watch should remain kept on the OPEC meeting. In our view, we expect no production freeze deal out of the meeting but the short-term rally in crdue oil prices would be positive for shares of PTT and PTTEP.
• In Thailand, stocks may remain under selling pressure from (i) telecoms counters amid a lingering cloud of uncertainty over 4G and (ii) banking space after MLR cuts. Normally banks cut their lending rates following in the footsteps of BOT. If no any cuts in deposit rates ensue, banks may be subject to further earnings downgrades, underscoring the fragile state of the economy. Despite everything, we believe Thai stocks may be poised for a higher open today helped by gains in energy shares amid soaring oil prices before resuming their descent but the downside appears limited. The trading range for the SET index is seen at 1360-1380 points today.
• For short-term trading strategy, we see the 1365-point level, equivalent to 14.6x FY16 forward P/E as a good entry point. The focus should be on shares of companies expected to reap the windfall from the government’s dining and travel tax break for Songkran. Equity holdings should be maintained at 40%-60% of the portfolio. Tourism recovery remains a key investment theme to play for the meantime. We recommend holding onto shares of AOT, CPALL and SPA in portfolio.
Source: poems.in.th / settrade.com
