Market back into volatile mode: There are two major factors that may shake the market later this week as ECB will make its policy decision on Jun 2 and a meeting of the OPEC exporters’ group is also scheduled for the same day. In our view, we believe there would be no additional stimulus measures from ECB ahead of the Brexit vote while OPEC meeting may possibly push highflying oil prices into correction if there is a negative surprise, a factor that would in turn put pressure on energy shares, which recently led the market’s rally and turn into a drag on the market.
Heavy foreign trading volume: Thai stocks on Tue received a boost from heavy foreign trading volume of more than Bt30bn, well above average foreign trades of only Bt10bn plus for the whole month due probably to MSCI portfolio rebalancing but net foreign buying of Thai shares was only Bt1.6bn.
Market rally in absence of fundamental support: Thai stocks rallied nicely but lacked fundamental support. For this reason, we see recent gains were largely driven by short-term speculation. To drive the market further higher, it may need fresh positive catalysts. Note that 15.7x forward P/E, the upper bound of the trading range over the same period last year is equivalent to the current SET index level of 1,439 points. The trading range for the SET index is expected to be between 1,410-1,430 points today.
Short-term strategy: Given the market’s rally in absence of fundamental support, investors should avoid chasing share prices but there still remains room for selective trading opportunities with any big market dips seen as buying opportunities.
(1) Tourism recovery play: Hold onto AOT shares.
(2) Selective play: Hold onto CHG shares.
(1) Tourism recovery play: Hold onto AOT shares.
(2) Selective play: Hold onto CHG shares.
Source: poems.in.th / settrade.com
