• No new liquidity measures out of ECB meeting: The ECB disappointed the market by leaving interest rates on hold and keeping the pace of its monthly asset purchases unchanged at 80bn euros on Thu against market expectations for more stimulus measures. It seems to us that a negative surprise from the ECB meeting may somewhat slacken the pace of fund inflows in the near term but massive fund outflows could be ruled out as hopes of more stimulus measures from the BOJ remain next week.
• No hurry for fund outflows: In our view, foreign funds which have recently poured into the market are mostly short-term hot money chasing quick profits on hopes of additional monetary easing from major global central banks and in a search for yield in a low rate environment. Despite no new stimulus measures from the ECB, we believe there is no hurry for foreign funds to flow out of the market amid hopes of more stimulus measures from the BOJ which is scheduled to meet late next week while earnings and dividend plays should also lend some support to the overall market.
• Some correction in store: As the SET index rallied sharply by more than 100 points only in one month, it may not surprise that some correction could be due to cool down the market while forecast-lagging results from big-cap banks like BBL and KBANK which reported profit declines in 2QFY16 could also potentially trigger a market selloff. The trading range for the SET index is seen at 1485, 1490-1510 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 ERW, BCH and SCN after booking profits in shares of PTTGC on Thu afternoon.
Source: poems.in.th / settrade.com
