Markets pin hope on G20, Opec meets
This week, the world will keep a close watch on the G20 summit with the Chinese media having reported that the US and China had agreed to cease hostility temporarily.
Meanwhile, outcome of the expected trade negotiations in July are difficult to gauge. Stock markets worldwide have already priced in this factor. On July 1-2, the Opec and non-Opec countries will meet at a semi-annual meeting, with investors’ attention on an extension of the deadline for reduction of crude production capacity to December 31, 2019 from the previous deadline of June 30, 2019.
The estimated reduction was made by the Iraqi minister at 1.2 million barrels or more if proposed in the meeting. We expect Brent crude price to swing in a range of US$63-$68 a barrel on one-month ahead. It will be positive to PTT, PTTEP, PTTGC and TOP.
Besides, investors are keeping an eye on the Fed chairman's briefing on the US economic performance in the first half of this year and the outlook for the second half to the US Congress on July 10.
We expect the Fed to hint of a rate cut by 25 basis points in the FOMC meeting on July 30-31, which could affect continuous capital inflow in the Thai capital and bond markets. During June 1-27, about Bt47 billion worth of capital, as a result of the MSCI rebalancing, moved into the Thai stock market. About Bt20 billion of capital is expected to move into the Thai stock market this month. Industrial estates - AMATA and WHA and retailers like CPALL, MAKRO, BJC, ROBINS are expected to gain from the government’s economic stimulus. Food firms like CPF, GFPT, TFG, TU are expected to reap benefits from increased prices, and power plants such as EGCO, RATCH, GPSC are expected to gain from a new round of investment.
Saravut Tachochavalit
Senior Vice President, Research Department
RHB Securities (Thailand)
Hope for continued
capital inflows
The stock market will be watching the development of the following issues and their impact on
capital inflows, including
- Solutions to the US-China trade disputes after the G20 meeting
- The US’s PMI in June today
- The Opec meeting on crude production capacity which will affect global crude prices
- Announcement of the US trade deficit of US$50 billion on Wednesday
- The figures on unemployment and non-farm employment in the US labour market
We keep a positive view on continued capital inflows to the SET, with an estimated movement range of 1,715-1,765 points.
Our picks:
MINT: fundamental price of Bt44.0
BGC: fundamental price of Bt15.0
TRUE: fundamental price of Bt7.77
Passakorn Linmaneechote
Deputy Managing Director – Research
Kasikorn Securities
