More choppiness in store after foreigners turn net sellers for first day

Foreigners turn net sellers of Thai shares for first day: Following a morethan-one-month streak of net foreign buying which sent the SET index higher by more than 100 points, foreign investors turned net sellers of Thai shares for the first time on Wed. Foreign fund flows need to be closely watched. If net foreign selling still persists, more correction may be in the pipeline for Thai stocks.
 

Crude oil regains ground: Data on Wed showed a bigger-than-expected build in US crude inventories last week, reflecting that supply glut remained strong but the comparison to the previous figures announced in the prior week suggested less oversupply in the market, which in turn helped oil prices regain some ground. Rising oil prices would mean less pressure on energy shares today.
 

More choppiness could be in store for Thai stocks ahead of charter referendum: In our view, a slowdown in foreign fund inflows reflects foreign investors are reluctant to take positions ahead of the Aug 7 charter referendum. There is also scope for a bout of foreign profit-taking to kick in on risk aversion ahead of the referendum vote. That means a lack of a boost to lead the market further higher this week. It seems to us that elevated levels of volatility will likely continue to rule the market ahead of the referendum vote. Given its current stretched valuation of 16.2x forward P/E, the market may be at risk of a sharp correction if the draft charter is voted down in the referendum. The trading range for the SET index today is seen at 1500-1515 points with key support level pegged at 1490 points. Cut loss for S/T trading if this support level is broken.
 

Investment strategy: Under current market conditions, selective play looks appropriate with a stop loss point set at 1490 points.
(1) Tourism recovery play: Hold onto AOT.
(2) Selective play: Hold onto CPF.
(3) Upside momentum play: Hold onto SCN.

Source: poems.in.th / settrade.com