‘Limited stock buying options at the current SET level’
Brokers urged investors to adopt a wait-and-watch approach as the Thai stock market has seen sharp rises without any new factors, while its valuation is high.
In terms of valuation, the SET Index at 1,680-1,690 points -- the zone to prompt the market’s earnings yield gap to return to the long-term average -- is the safe zone for buy.
Trinity Securities’ research department said last week that the Thai stock market has seen sharp rises without no new factors, while its valuation has been high. “Strategically, we will adopt a wait-and-see attitude. In terms of valuation, the SET Index at 1,680-1,690 points, the zone to prompt the market's earnings yield gap to return to the long-term average, is the safe zone for buy. Our assumptions are the US 10-year bond yield at 1.95 per cent and this year’s estimated market earnings per share at Bt105.5,” the department said.
According to Trinity, when the SET Index retreats, the attractive stocks are:
1. Stocks with gains from the government policy to stimulate consumption -- CPALL, BJC, ROBINS;
2. Big caps with low valuations and laggard prices -- SCB, MINT;
3. Stocks with estimated interim dividend payment and expected outperformance in the third quarter of every year -- LH;
4. Stocks with gains from estimated interest rate cuts -- TCAP, S11.
Positive alpha with low beta: But if investors want to stay in the safe zone during market volatility, investors may focus on the said stocks with positive Alpha and Beta at lower than 1 time such as ROBINS, LH, TCAP, S11.
This week, the focus will be on the following issues.
1. Fed chairman Jerome Powell’s statement and explanation to the US Congress on July 10-11.
2. Dissemination of the Fed minutes on July 10 and European Central Bank minutes on July 11.
3. Announcement of Thai-listed companies' earnings results.
Meanwhile, DBS Vickers Securities (Thailand)’s head of research Thanawat Patchimkul said that Japan's decision to curb exports of high-tech materials to South Korea could have a significant impact on electronics supply chains, not only in Korea, but also the region.
Last week, the Japanese government said that it would curb the exports of high-tech materials to South Korea. Bilateral diplomatic ties have deteriorated over disputes regarding compensation for South Koreans forced to work for Japanese firms during World War II. Effective Thursday, Japan will require its exporters to seek approval when shipping three high-tech materials to South Korea, a process that will take up to 90 days.
The three high-tech materials on Japan’s restriction list are crucial for the manufacture of semiconductors and display screens. Japan currently dominates global supply of these materials. On the other hand, South Korea plays a key role in the global supply of memory chips and OLED screens.
A shortage/delay in component supply could affect the downstream electronics producers around the region. This could make the Thai electronic sector vulnerable.
