Possible new highs for Thai stocks on bullish overseas sentiment

• US nonfarm payrolls up in Jun: A big miss in US nonfarm payrolls on the downside in May was one of the key factors that prompted the Federal Reserve to delay interest rate rises. On the other hand, US jobless rate rose slightly, reflecting the overall US economy has regained speed after a first-quarter lull. Upbeat jobs data led US stocks to log new highs last Fri and other global equity markets also followed Wall Street higher on bullish sentiment. However, a string of upbeat US economic data could bring fears of a Federal Reserve rate hike back to the fore.

• Oil steady: WTI crude oil prices held steady around US$45/barrel, a factor that would continue to weigh on energy counters, going forward.

• Bank earnings looming large: Consensus forecasts show 2Q bank profits will be flat q-q and down y-y. In our view, any earnings misses may put the market into a sharp correction as bank profits account for one fourth of the market’s EPS.
 

• Sentiment bullish but limited upside left: Thai stocks may continue to benefit from bullish overseas sentiment today but limited room for upside could leave the market vulnerable to a bout of short-term profit-taking after a lack of strong foreign fund inflows since the start of the month and a continued money game of short-term speculative trading with alternate bouts of buying and selling by institutional investors which turned heavy net sellers of Thai shares last Fri. Support for the SET index is seen at 1444 points and resistance at 1467 points today.
 

• Investment strategy: To play current market conditions, a selective strategy remains the preferred choice. Any rallies should also be used as profit-taking opportunities.
(1) Tourism recovery play: Hold onto AOT.
(2) Selective play: Hold onto PTTGC and MAJOR. A long position on CMR was also added to the portfolio last Fri afternoon.
(3) Upside momentum play: Hold onto ERW, BCH and SCN.

Source: poems.in.th / settrade.com