After SET drops in final week of 2014, situation to improve in first quarter
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In the last week of 2014, the SET Index dropped 12.74 points to close at 1,497.67 following consistent declines in oil prices and concerns over Greece's political situation.
During the thin year-end trading, the Stock Exchange of Thailand fell through its support level of 1,500 on December 29 and was not able to stay above that level the next day. In the meantime, foreign bourses moved down on similar factors.
Major variables for the first week of January 2015 include China’s manufacturing PMI (Purchasing Managers Index). If the figure comes out as expected at 50.0, it will be the lowest in two years.
Drops in crude-oil prices may lead to downward revisions in energy stocks’ earnings estimates. About 30 per cent of listed companies’ net profit comes from energy stocks.
There’s a chance for the SET to face a selling spree from LTF/RMF (long-term equity funds and retirement mutual funds) redemption. The SET rose about 50 per cent from the 2014 average and this is attractive for LTF sales.
Retreats are expected early this month on LTF/RMF selling pressure and worries about the downward revision of energy stocks’ earnings estimates.
However, the first-quarter market situation is expected to improve on the European Central Bank’s January 22 and March 5 meetings. Expectations are for a series of monetary easing or for such measure to drive the global stock markets, particularly emerging markets.
Based on our study, the Thai bourse rode an up-cycle from 2010 through last year. Despite rises in January of some years, the SET increased throughout the first quarter for the past five years. The SET100 has yielded a return of 0.98-15.89 per cent in the first quarters of 2010-14.
Our stock picks are ADVANC (Advanced Info Service), INTUCH (Intouch Holdings), SPCG, TISCO (Tisco Financial Group), EGCO (Electricity Generating), RATCH (Ratchaburi Electricity Generating Holding), CPN (Central Pattana) and CPF (Charoen Pokphand Foods).
Our technical picks are JAS (Jasmine International) and KCE (KCE Electronics).
