• Oil hits 2016 highs: WTI crude oil prices jumped to new highs for the year at US$45/barrel on Wed. However, we stick to our view that the room for further upside however looks limited as oil had rallied by up to 70% for more than the past two months from its bottom of around US$26/barrel.
• Fed leaves rates unchanged: The US Federal Reserve stood pat on interest rates as widely expected, adding that the next rate increase would be contingent on external developments amid persistently low levels of oil prices and slowing economic growth in China. As the Fed’s policy decision did not take the market by surprise, the positive impact on market sentiment would therefore be limited.
• Watch out for profit-taking: Even though rising oil prices may give the market a shot in the arm in the near term, we believe the upside room remains limited for Thai stocks and the risk also appears biased to the downside rather than the upside as the market has been largely dominated by earnings for the meantime. In addition, Thai stocks are now no longer cheap at 15x forward P/E. Historical data also suggests foreign investors normally book profits on positions after the end of the dividend season. This could be reflected by short-covering by foreign investors on Wed with heavy net short positions of more than 12,000 contracts in futures. The trading range for the SET index is seen at 1395, 1400-1415 points today.
• 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, CPALL and SPA shares.
(2) Selective play: Hold onto MAJOR shares and raise profit-taking target to Bt33.75 on expectations of increasing momentum after Captain America 3 broke Bt40mn mark in less than 24 hrs.
Source: poems.in.th / settrade.com
