Marketview

The SET Index closed almost flat at 1,062.37 last week while speculators jumped in ahead of the announcement of US President Barack Obama's job-creation plan. However, the US measure will take time to implement.

We believe that investors will shift their focus to the worsening economic data coming up.

The evidence is that only brokerage accounts were active last week while others remained on the sidelines. This indicates that the SET's bounce-back should be short-lived and likely limited.

Without investor support, the Thai stock market will tend to be sensitive to the global slowdown. Will all cyclical stocks price in the risk from earnings reductions? We think that they respond partially based on their valuations.

Did the Thai market pass its bottom? Our key indicators suggest it did not.

The global financial condition index weakened to the level where it was in the 2008 crisis, while credit default swaps for European countries have not set a peak yet.

Asia including Thailand released economic data in a downward trend, which is expected to continue. None of the integrated data are kind to risk assets in our opinion.

Therefore, we predict the SET will sag this week. Our strategy is to hold more cash and stay in defensive stocks. Our picks are HMPRO, BGH, SAT, KCAR, ROBINS and CPN.

Tisco Securities

The Thai market is continuing to take its cues from external factors, resulting in high volatility and low trading volumes. We expect the SET to trade in a narrow range until concerns about a US/EU recession ease.

Investor sentiment has recently been dampened by an unexpected pick-up in inflation. Headline inflation jumped to nearly a three-year high of 4.3 per cent in August, versus 4.1 per cent in July, while core CPI rose to 2.85 per cent against the market consensus of 2.7 per cent.

However, we expect the excise tax cuts on fuel to reduce inflation rates over the next few months.

Also hurting the market's mood was the first decline in the Consumer Confidence Index in four months in August. Consumer confidence was hurt by floods, the rise in living costs and global economic uncertainty.

Investors also appear disappointed by the lack of clarity in the Yingluck government's economic policies amid threats of union action if the coalition backslides on its promise of a Bt300-per-day minimum wage nationwide. We believe this pre-election pledge will be watered down via training and eligibility criteria so as not to crush the SME sector, which accounts for 78 per cent of the workforce.

We continue to recommend an overweight position in the banking sector and expect major banks to benefit from an estimated hike of 25 basis points in the Bank of Thailand's policy rate on October 19.

We also see trading opportu-nities in beaten-down stocks in the energy and petrochemical sectors.

Sentiment towards telcoms has improved following the Senate's selection of the 11 NBTC members, a key step before the 3G licence auction. However, the sector now looks overbought and could face short-term profit-taking.