Oil sinks further on oversupply, demand concerns: WTI crude oil prices fell further to US$43/barrel on rising concerns about global supply glut and demand. In our view, shares of Thai energy companies, which have of late rallied on fund inflows, bucking the downward trend in oil prices, may be at risk of profit-taking but the broad market should however continue to receive a boost from earnings plays in the near term at least until the end of the earnings season.
Fund flows show clear signs of slowing down in near term: Even though foreigners remained net buyers of Thai shares, the buying amount however showed signs of slowing down while the recent fund inflows were also suspected to come from a shift of funds from bonds as reflected by foreign selloff in bonds and a rise in bond yields. In addition, the room for further strength of the Thai baht looks limited in the near term. To turn the tab on for more fund inflows, a monetary policy surprise from the Bank of Japan (BOJ) i.e. expansion of negative interest rate policy or QE much larger than what the market currently anticipates may be needed.
Topside target seen at 1530 points: Key factors to watch in the near term include (i) monetary policy from major global central banks and fund flows and (ii) corporate earnings consensus during the midst of earnings season. The trading range for the SET index is seen at 1495-1520, 1530 points today.
Investment strategy: 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 ERW, BCH and SCN.
(1) Tourism recovery play: Hold onto AOT.
(2) Selective play: Hold onto MAJOR and CMR.
(3) Upside momentum play: Hold onto ERW, BCH and SCN.
Source: poems.in.th / settrade.com
