By Research Department, Trinity Securities
1 US bond yield remains low, a positive factor for the SET Index in terms of earning yield gap.
2 Global Purchasing Managers Index was steady for the first time last November, reflecting global business operators’ easing concerns on the trade war. Based on our study, this index usually indicates movements of emerging markets in the next three months.
3 Crude prices have limited downside risks after the OPEC+ Group decided to reduce crude production capacity in its latest meeting. Saudi Arabia will also reduce its crude exports to the US from the beginning of next year.
1 Estimated earnings of listed companies, particularly small and mid caps, have been downgraded continuously. Thus, the SET Index does not have attractive valuation in term of price to earnings.
2 General investors’ participating level drops to a record low at 34 per cent. And this is negative for small and mid caps in term of liquidity.
3 Uncertainty over Brexit remains. The pound sterling will likely come under pressure and that will be positive for the US dollar.
Investment strategy: The SET Index at below 1,600 points is attractive for investors to buy stocks.
Focus on big caps with high dividend yield in SETHD such as PTT, SCC, ADVANC.
The SET Index may rise to its shortterm target at 1,630 points, the level the market earnings yield gap moves to the longterm average with forward price to earnings of 14 times, the level of stability.