• Fed stays pat as expected: The Fed on Wed left interest rates unchanged in line with market expectations, adding that job gains rebounded sharply in Jun. We stick to our view that there remains scope for the Fed to raise rates at least once this year. In commodity markets, WTI crude oil prices fell further on Wed. Slumping oil prices would weigh further on energy names today but earnings plays should provide support to the sector’s downside.
• Spotlight now on BOJ: The Japanese government on Wed unveiled a surprisingly large 28-trillion-yen stimulus package to reflate the world’s third largest economy. The size of the package was bigger than 20trn yen the market previously expected. The focus will now shift to the Bank of Japan, which meets on Fri to see whether it will expand its QE or launch new measures to lift the country clear of decades of deflation and stagnation. As the market has high hopes for QE expansion, any smaller-than-expected QE increase may send the market into a tailspin after recent disappointment from BOE and ECB.
• Fund inflows strong, topside target seen at 1530 points: Fund inflows picked up again helped by Japan’s further fiscal policy measures. YTD fund inflows into Thai equities topped US$2bn while we estimate fund inflows for the year to be US$2.5bn. The topside target for SET index is seen at 1530 points. However, any positive surprise from BOJ and earnings reports may further speed up fund inflows and drive the SET index further higher in the near term. The trading range for the SET index is seen at 1500-1530 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 CMR. On Thu, we added long position on CPF as an earnings play to the portfolio.
(3) Upside momentum play: Hold onto ERW and SCN after we booked profit in BCH on Thu.
Source: poems.in.th / settrade.com
