SET VOLATILITY TO STAY, RESISTANCE AT 1,700 POINTS

Economy November 05, 2018 01:00

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The market rebounded by three per cent last week, driven by net purchases by local institutional investors. Others, particularly foreign investors, were net sellers.



Market volatility is expected to continue, dependent on further purchases by local institutional investors. Previously, profit-taking usually followed accumulative net purchases of about Bt20 billion in 10-15 days. The followings are major issues of the week:

The US mid-term elections will take place on November 6. The latest poll indicated the Democrat Party leading the Republicans by 50.2 per cent to 42 per cent. If the Democrats managed to take control of either the House or the Senate, it could have an impact on Trump’s policies including world trade. 

Global interest rates are on the upward trend, led by eight Fed rate hikes since December 2015 in the US. 

The Thai policy rate is expected to remain at 1.5 per cent after the Monetary Policy Committee meeting on November 14, in view of the 5.3-per-cent contraction year on year in September exports and slowdown in inflation. The SET Index will fluctuate with resistance set at 1,700 points. Short-term trading poses high risks but investors could gradually buy stocks with strong fundamental for long-term investment.

Investment theme: Stocks which will gain from activites of the Eastern Economic Corridor. Two mega-infrastructure projects are expected to take off this month, the high-speed train connecting three airports and the Eastern aviation city (U-tapao). Stock picks are AMATA (fair value@Bt35.70), WHA (FV@Bt4.89) and EASTW (FV@Bt13). – Therdsak Thaveeteeratham, Executive Vice President/Research, Asia Plus Securities