• Oil down on supply glut concerns: WTI crude oil prices tumbled more than 4% on Wed after data showed US crude stockpiles fell less than expected last week, painting a weakening demand picture and heightening concerns about a supply glut. In our view, falling oil prices would be a drag on energy counters today.
• ADTV up as market headed into speculative mode: YTD ADTV on the Thai bourse jumped to Bt60bn/day from an average of Bt48bn/day in the prior month. The current market rally was also driven by foreign buying spree, which continued unabated throughout this month on earnings and dividend plays. In a big picture sense, it seems to us that the market is now in a speculative mode without fundamental support. As things stand, any negative earnings surprises may put Thai stocks at risk of a sharp correction as the market is in a fragile state.
• Thai stocks due for modest pullback after extended rally: Even though current valuations were no longer cheap, the market continued to receive a boost from fund inflows and earnings plays. However in light of the SET index’s rally near our topside target of 1485 points on Wed, two straight days of institutional sell-offs and the absence of fresh positive triggers, Thai stocks may be due for a modest pullback today after an extended rally. The trading range for the SET index is seen at 1460-1485 points today.
• Investment strategy: In our view, any rises should be used as profit taking opportunities. For trading, we feel selective short-term play looks best for the meantime. It is also better to set a clear stop loss point and not to chase share prices.
(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
