• Worst day on Wall Street: The DJIA lost 210 points or 1.17% on Thu as the market crumbled under the combined weight of disappointing economic data and weak corporate earnings. The Labor Department said US GDP grew at a 0.5% annual rate in 1Q16, the weakest in 3 years since 1Q14 and falling short of economists’ forecasts of a 0.7% expansion. Overnight losses on Wall Street may dampen sentiment in Thai stocks today.
• Profit-taking by proprietary traders: Thai stocks slipped on Thu on profit-taking by proprietary traders as previously thought. Normally proprietary traders are engaged in highly speculative, short-term trades but their huge YTD net inflows of more than Bt16bn may leave the market vulnerable to a sporadic bout of profit-taking.
• Watch out for risk-aversion selloff in late trading: In a big-picture sense, Thai stocks may be headed lower in a range of 1380, 1390-1410 points today due to a confluence of factors including (i) a lack of fresh positive catalysts, (ii) the long holiday effect next week which will shorten the week to only 2 trading days, and (iii) the fact that Thai stocks are now no longer cheap around 15x forward P/E, less attractive entry point for both institutional and foreign investors. In addition, investors should watch out for a possible bout of risk-aversion sell-off in late trading ahead of a long holiday weekend.
• Short-term strategy: Selective play will continue to do well in current market conditions. Equity exposure should also be kept at 60% of the portfolio.
(1) Tourism recovery play: Hold onto AOT and CPALL shares and add more long positions in SPA after share prices dipped but earnings are expected to remain strong.
(2) Selective play: Take profits in MAJOR shares.
Source: poems.in.th / settrade.com
