Short of new positives and fund flow, the SET Index likely in a range of 1,800-1,820 points.
Despite signs of the economic recovery, the EEC development and annual earnings performance of listed companies, the SET Index dropped to below 1,800 points again, likely due to no support from capital movement or more fear of US interest rate rises. One among issues that need monitoring and could pressure the stock market is concern over the direction of the US benchmark rates with an estimated first hike this March and two to three more rises over the rest of this year. This issue could continue its impact on the SET Index this week. Meanwhile, based on a study, a rate rise did not prompt a significant market drop. On the contrary, stock prices increased in the medium to long term. The other issue involves Thailand’s political developments, which have raised concerns over a possible postponement of the general election.
This week, there were not yet any new positive factor and thus the SET Index is expected to stay in a correction in a range of 1,790-1,820 points. We pick stocks with solid fundamentals and prices lower than fair value: AMATA WHA and BBL.
No impact on road map to the election.
KS Research has seen a recent drop in the SET Index from too much concern over the election after the NLA voted down all seven new Election Commissioner candidates in a secret meeting last Thursday. We think this issue has not affected the roadmap for the election expected in February 2019.
NLA’s consideration for the election bill needs more monitoring. If the bill get approved, the election will be clearer and the SET Index is expected to give positive response and rise to test 1,840 points in March of this year.
Besides, the SET Index gets another positive signal from foreign investors’ net long of 45,000 contracts for SET50 for eight consecutive days, the highest and longest in six months.
In the past five years, foreign investors bought Bt17 billion net of Thai stocks on average every March and the SET Total Return (SET plus Dividend Yield) averages 4.5 per cent during March-April.
Therefore, drops in the SET Index during this period have given a chance for stock accumulation.
Based on our investment theme, we prefer dividend plays, which are expected to pay over 3 per cent dividend during March-May 2018 and upside at over 10 per cent. Buy late February and sell late April. Stock picks: TISCO KTB DELTA SC AP PSH QH.