Marketwatch

Market corrections with
limited downside risks

The SET Index has risen by more than 2 per cent since the government’s announcement of the election schedule on January 24, posting net accumulative foreign purchases of nearly Bt8 billion and net accumulative local institutional purchase of about Bt20 billion.
Selective profit-takings took place late last week as drive from the poll news started to lose momentum 
This week, the SET Index is expected to be influenced by external issues, particularly the upcoming US-China trade talks and Brexit. Several central banks across the world have given a similar signal that there would not be a rise in interest rate in the next 36 months. Thus, capital inflows may resume into debt instruments and to a lesser extent, the stock markets.
From now until the end of February, listed companies will announce their net profits, expected to be no less than a total of Bt250 billion in the fourth quarter of 2018 and no less than Bt1 trillion for the whole of last year. The SET’s dividend yields average at 2.5 per cent per year and dividend announcement will likely limit market downside. –

SET more attractive

The SET Index is currently trading on price to earnings (PE) and price to book value (PBV) at 14.75 and 1.78 times respectively, lower than the markets in the Philippines (PE=16.87, PBV=1.92), Indonesia (PE=15.74, PBV=2.31) and Malaysia (PE=16.26, *PBV=1.6). 
The SET is more attractive than its regional peers in terms of valuations and fundamentals, while the certain election schedule could draw foreign capital back into the Thai bourse. 
Unit prices of Ishares MSCI Thailand ETF, which tracks the SET Index, has risen continuously and above its NAV since early this year, indicating foreign investors’ view that the SET Index uptrend would continue. We forecast foreign holding of Thai stocks to increase to the 2018 average at 31.23 per cent from the current 30.53 per cent. – Passakorn Linmaneechote Deputy Managing Director – ResearchKasikorn Securities

Negative impact to
dampen SET progress 

Volatility has increased in the Thai stock market under pressure from local and external matters, moving in a range of 1,6371,667 points. Although foreign capital has moved back into Thai equiฌties following the election announcement, external issues have dampened the momentum. At the same time, the Thai Monetary Policy Committee (MPC) decided to leave the policy rate unchanged at 1.75 per cent, while expressing concerns on demand and domestic investment given the likely impact on Thai exports and tourism from the weakening global economy. 
Several projects in the Eastern Economic Corridor may be delayed and the bidding result of the high-speed railฌway project has now been postponed to March. We estimate the SET Index to swing in a range, with resistance at 1,660 and support at 1,630 points.
This week’s strategy:
The market is expected to face volatility due to domestic political issues and confusion in external developments. Stocks that rise early in the week will likely be pressured down by profit-takings. Buying spree will go to stocks, which have risen slightly. We prefer mid-caps whose prices rose less than it should, such as ANAN, MAJOR, SAMTEL. In our portfolio, CPN was cut loss in TF week. SCCC and WHA reached the cut-loss point in TF day. We hold AOT to wait for 4Q/18 earnings result.
Stock picks: ANAN – technical, fair price at Bt3.96; MAJOR – technical, fair price at Bt25; SAMTEL – technical, fair price at Bt8 – Tisco Securities