• US stocks up for 2nd day: Wall Street shares advanced for a 2nd straight day on Wed after upbeat US economic data set and Fed rate hike signal gave the market a more upbeat view on the US economy. For now, the market will be looking to the release of the 2nd US 1Q16 GDP estimate and comments by Fed Chair Janet Yellen at a Harvard University event on Fri.
• Trading reflects lack of conviction in market: The SET index tracked global equities markets higher on Wed but the volume of net foreign buying was meager and overall trading volume dropped below averages. However, the prospect of a Fed rate hike is seen as negative for foreign fund flows into Asia and it would remain a drag that could send the market into a correction. In the latest developments, Fed funds futures priced in a 30% chance of a Fed rate hike in Jun and a 50% likelihood in Jul.
• Downside risks outweigh upside: The latest round of consensus EPS downgrades and the worse-than-expected Thai import and export numbers seem to lend no support to the market’s rally. In our view, any gains are seen only as a technical bounce while light trading volume may also keep the market from going anywhere far. The trading range for the SET index is expected to be between 1385-1409 points today.
• Short-term strategy:Our view is to sell the rallies and buy the dips as long as the SET index can hold above 1380 points. For long-term investment horizon, the ‘buy the dip’ strategy looks more appropriate..
(1) Tourism recovery play: AOT is still worth holding in the portfolio.
(2) Selective play: Today we advise investors to continue going long BBL and take long positions on CHG in view of its steady growth outlook, capacity expansion, which could boost its A-class cash patient volume by more than 40% and an increasing number of social security patients from Chularat Rayong Hospital after we took profits on LOXLEY at short-term target price with a capital gain of around 5.6% on Wed.
Source: poems.in.th / settrade.com
