Limited room for fund inflows in near term: In our view, the room for further fund inflows may be limited in the near term after net foreign buying of Thai shares topped Bt14bn over the past two sessions after last Sun’s charter referendum. Our forecast shows there will be scope for an additional Bt4bn inflow of foreign funds into Thai stocks which would boost the SET index by only another 5 points based on assumptions that other factors remain largely unchanged. To spur more fund inflows, further monetary easing action from ECB at next month’s policy meeting may be needed.
Draft charter passes referendum but there is no significant change to stock market and economic fundamentals: Government spending would continue to be a key driver of the Thai economy. Even though corporate earnings look better than previously thought, the figures remains mediocre and below last year’s numbers. In valuation terms, the SET index is also inching closer towards 17x forward P/E.
Door still open for momentum trading in near term but clear stop loss needs to be set: From our viewpoint, there remains room for shortterm trading opportunities but on a selective basis. The focus should be on earnings plays during the final stretch of the earnings season and interim dividend plays. Any dips in the SET index should not break below 1535 points as this could set it up for a deeper pullback towards 1522 points. Resistance for the SET index is seen at 1555-1560 points today.
Trading ideas: The best stratey is selective for the meantime.
(1) Tourism recovery play: Book partial profits in AOT at Bt420.
(2) Selective play: Hold onto CPF and SAT.
(3) Upside momentum play: Hold onto SCN.
Source: poems.in.th / settrade.com
