• Dow, S&P500 hit record highs: A broad rally lifted the DJIA and the S&P 500 to fresh record highs on Tue while WTI crude oil prices bounced back above US$45/barrel. Overnight gains on Wall Street and rising oil prices would give sentiment in the Thai stock market a boost but to a limited extent today as there is limited room for further upside left.
• Foreigners turn to net buyers of Thai shares: Foreign investors switched to net buyers of Thai shares for the month to date partly on hopes of additional stimulus measures from Japan and China and the prospect of a delay in the US interest rate hike and dividend expectations in a search for yield. However, low holding costs of YTD foreign fund inflows at around 1300 points may leave the market at risk of profit-taking cycle especially after the end of the earnings season. On the other hand, some profit-taking already emerged from institutional investors.
• SETI headed into profit-taking zone: Fundamentally speaking, following strong gains of more than 60 points in a post-Brexit rally, Thai stocks are now no longer cheap. Based on FY16 EPS consensus of Bt93/share, the market’s fair forward P/E ratio is put at 15.8x, the upper bound of its historical valuation range. As things stand, we believe bullish external conditions would set the market up for further but limited gains today while the risk of profit-taking is rising. Support for the SET index is seen at 1450, 1460 points and resistance at 1485 points today.
• Investment strategy: Any rises should be taken as profit-taking opportunities. For trading, we feel selective short-term play looks best right now and a clear stop loss point should be set.
(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
