Fed rate hike back in focus

Fed rate hike likely appropriate in comming months: US central bank chief Janet Yellen said during an appearance at Harvard University last Fri that the Federal Reserve should raise interest rates in the coming months if the economy picks up as expected and jobs continue to generated. Her comments sent the US dollar higher and got the baht on the back foot, a factor that would dent the attractiveness of Thai stocks to lure fund inflows.
 

Lack of positive catalysts: The latest round of earnings downgrades after the end of the first-quarter earnings season has brought market EPS consensus down to Bt91.7/share, thereby putting the SET index at around 15.3x forward P/E, which is seen as no longer cheap anymore. On the other hand, historical statistics suggests 14.6x forward P/E, equivalent to the SET index of 1340 points is viewed as a trigger point for institutional buying. As things stand, it seems to us current market gains would be driven by shortterm speculation only.
 

Further gains seen limited: With the backdrop of key external uncertainties that could bring a lot of volatility to the market and a lack of strong domestic positive catalysts amid a no longer cheap market valuation, there is a risk of a correction or a sharp pullback if negative news flows hit the market. The trading range for the SET index is expected to be 1400-1420 points today.
 

Trading strategy: In the near term, the strategy is to sell the rallies and buy the dips. For long-term investment horizon, any dips should be taken as a buying opportunity.
(1) Tourism recovery play: Hold onto AOT shares.
(2) Selective play: Let profits run on CHG shares with short-term target price adjusted upward on bullish momentum that sent share prices higher to close at the day’s high last Fri. Technical View: Sell into strength

Source: poems.in.th / settrade.com