• Monetary easing measures from BOE: The BOE slashed interest rates by 25 bps to a record-low 0.25% and raised the target for government bond purchases, the so-called QE to 435bn pounds from 375bn pounds. The BOE decision caused the pound to lose little ground against the US dollar but European shares reacted very little to the rate cut. As things stand, what remains to be seen is how much fresh funds would flow into emerging markets in a search for yield in a low interest rate environment.
• Crude oil rebound: WTI crude oil prices bounced back to US$41.93/barrel, which would be positive for energy shares today. Despite profit-taking in big bank names, Thai stocks on Thu managed to finish the session in the green zone helped by gains in energy counters probably driven largely by speculation over PTT’s strong 2QFY16 results.
• Steady decline in trading volumes: ADTV on the Thai bourse plunged to a mere Bt46,436mn on Thu from an average of Bt60,432mn in the prior month. In our view, a slowdown in trading volumes reflected investors stayed sidelined ahead of the Aug 7 charter referendum. In this sense, we expect another sideways session for Thai stocks today but sporadic bouts of profit-taking to limit risk exposure ahead of Sun’s referendum vote may kick in throughout the session. The trading range for the SET index is seen at 1500-1515 points today.
• 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. On Thu, we added long positions on SAT to the portfolio in view of strong 2QFY16 earnings expectations. Our auto analyst puts SAT’s 2QFY16 profit growth at 86% y-y.
(3) Upside momentum play: Hold onto SCN.
Source: poems.in.th / settrade.com
