Tuesday, July 23, 2019

GLOBAL SLOWDOWN TO FURTHER RESTRAIN ECONOMY

Jan 20. 2019
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Amid the ongoing slowdown in global growth, key indicators of major economies are pointing to further deceleration in economic activities.

So far, exports have declined while manufacturing purchase managers’ index has either contracted or stalled in several countries, including China and some Asean nations. 

We believe the US Fed will hold its benchmark rate at the first few monetary policy meetings scheduled for this year. 

Other central banks will likely refrain from tightening in tandem with the Fed. Given the potential peaking of interest rates, we believe the REIT sector will perform well this year. 

The REIT sector in Singapore offers a wide array of assets to investors, such as office, malls, hospitality, industrials and healthcare. These REITs invest in assets across the globe, including real estate in Singapore, Australia, Europe, US and China. 

For investors seeking a diversified SG REIT portfolio, they may be interested in “NIKKOAM StraitsTrading Asia ex Japan REIT ETF”. 

The ETF is listed on the Singapore Stock Exchange, comes with an annual management fee of 0.50 per cent and offers quarterly dividends. – Thanawat Patchimkul,Head of Research, |DBS Vickers Securities (Thailand)

Poll news welcomed 

The SET Index moved in a narrow range of 1,565-1,594 points last week, due mainly to the worse-than-expected earnings of banks and non-performing loans of financial groups despite the return of foreign investors. 

Brexit failed to pass the UK parliament in a vote last week but a new plan is expected to be announced today for a new vote on January 29. Global crude price stayed above US&50 per barrel, helping to support energy stocks. 

Locally, a deputy prime minister aired his view on March 24 as the proper election date which came as a positive to Thai stocks. 

For this week, resistance is set at 1,610 points, support at 1,575. 

Investment strategy: We expect the Thai bourse will gain from the clearer picture of the national election. Foreign capital has started to return to Thai stocks and the SET Index has a chance to test the resistance at 1,600. We pick ORI (estimated high earnings results in FY2018, its price has plunged by over 40 per cent in the past three months) and hold AOT (expecting recovery in number of passengers), BTS and KKP – both were included in our picks last week. An ex-dividend was posted on BTS with dividend of Bt0.17 a share. We revised the cut-loss to Bt9.20. 

This week’s pick

 ORI: Technical fair price at Bt7.45

– Tisco Securities

SIDEWAYS CLIMB 

The SET Index is expected to move up sideways in view of improved signals from the US-China trade negotiations, rising crude prices and better direction of capital movement. Given the sideways market and low trade volume, the proper strategy this week is to limit turnover and wait for the SET Index to move in a certain way before making a move. The short-term resistance is set between 1,600-1,620 points (forward price to earnings at 14 times) and the major support is 1,560-1,580 points (no new low). Buy on weakness and sell in strength within the lines. Accumulate big caps with high dividend (PTT, SCC, ADVANC, BBL, KTB). 

The Thai bourse has yet to see large capital inflows (year to date – Bt500 million), compared with other countries. Some investors have adopted a wait-and-see attitude, expecting the election results in March to steer the SET index in a certain direction.

In the first 1-3 months of this fiscal year, the market has moved sideways in a narrow range. Given the base case, we expect the election results and the new government will lead to increased certainty in the economic policy. – Research Department, Trinity Securities

 

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