• US GDP below forecast, oil still in the doldrums: The US economy grew at a 1.2% annual rate in 2QFY16, less than a half of a 2.6% growth rate economists had expected. Disappointing GDP data also cut Fed rate hike bets in the next few months. In commodity markets, WTI crude oil remained anchored at low levels around US$41.4/barrel in today’s early trading after price lost more than 18% from its peak, bucking a rally in energy shares especially PTT driven by ongoing strong inflow of foreign funds .
• Fund flows likely to lose steam: Net foreign inflows into Thai equities topped Bt44,369mn in Jul, sending the SET index higher by more than 100 points but it is interesting to note that fund flow momentum that served as a key driver for the recent rally in Thai stocks however lost steam last week. Within hindsight, fund flows which have of late come in a big and rapid way need to be closely watched. As the current rally has been running well ahead of fundamentals, the market is therefore vulnerable to the risk of correction at any time. Last Fri, net foreign buying of Thai shares markedly dissipated to a mere Bt627mn, well below the 10-day average net purchases of around Bt3bn.
• S/T topside target pegged at 1530 points: The SET index has already inched closer towards our S/T topside target of 1530 points but its current stretched valuation of 16.6x forward P/E based on consensus EPS forecast of Bt92/share may however leave it prone to a pullback along the way rather than a further rally. The trading range for the SET index is seen at 1510-1530 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 CPF, cut loss on CMR and add long positions on SPALI to the portfolio instead.
(3) Upside momentum play: Hold onto SCN after booking profits in ERW last Fri afternoon.
Source: poems.in.th / settrade.com
