• ECB meeting in spotlight: The ECB’s policy meeting will take center stage today. In our view, no further liquidity measures are expected out of the meeting despite lingering Brexit concerns as the euro has weakened somewhat against the US dollar after the Brexit referendum, leaving the ECB in no hurry to roll out more liquidity measures. However, given that fund flow and currency trends may raise some investor expectations for further monetary easing measures, it therefore seems to us that ECB’s failure to meet market expectations could possibly slow down the pace of fund inflows in the near term.
• Bias still towards the buy side of the market: If the outcomes of the ECB and BOJ’s policy meetings fall short of market expectations for further stimulus measures, we believe the impact may only slow down the pace of fund inflows and fund exodus could be ruled out as the market may shift its expectations to the next meetings in Sep while earnings and dividend plays should lend support to the overall market.
• Short-term topside target seen at 1530 points: In our view, the continued search for yield in a negative rate environment could possibly re-rate the SET index higher to trade at 17x forward P/E. The trading range for the SET index is seen at 1485-1515, 1530 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
