• Wall Street dances to earnings tune: As US stocks danced to earnings tune, it seems to us that sentiment passed through Thai stocks may be less than what was previously seen. On the economic front, data showed US building permits and housing starts beat market forecasts. US housing data is now worth watching closely after house prices showed signs of picking up, a factor that may bring fears of a US Federal Reserve rate hike back to the fore.
• Fund inflows continue but may slow down: Even though fund inflows continued into Thai stocks, we believe the pace of inflows may slow down somewhat after the market’s valuation looks stretched at 16x forward P/E. To keep funds flowing in going foward, much would hinge largely on hopes of further monetary easing from major global central banks especially ECB and BOJ which are due to meet tomorrow and late next week respectively.
• Bias still towards the buy side of the market: It seems to us that the overall bias remains towards the buy side of themarket on the back of earnings and dividend plays and speculation over monetary policy decisions of major global central banks. The short-term topside target for the SET index is seen at no more than 1530 points or 17x forward P/E based on a scenario of further monetary easing from ECB and BOJ and FY16 EPS consensus of Bt90/share. The trading range for the SET index is expected to be between 1485-1515 points today.
• Investment strategy: In our view, selective short-term play looks best for the meantime.
(1) Tourism recovery play: Hold onto AOT.
(2) Selective play: Hold onto MAJOR and CMR.
(3) Upside momentum play: Hold onto PTTGC, ERW, BCH and SCN.
Source: poems.in.th / settrade.com
