SET RECOVERY UNLIKELY AS VOLATILITY CONTINUES
The SET index rose by 1.8 per cent in the first two weeks of the year on the back of positive developments in two key issues – the US-China trade talks showing signs of a compromise, and the Fed’s dovish tone on further rate hikes and its intention for a gradual reduction of its balance sheet.
Last week, corrections were made in the prices of two sectors that came under pressure. Hospitals were confronted with a state plan to control prices of drugs, medical products and services while ICT stocks took a dip after DTAC agreed to pay CAT Telecom compensation to end all claims related to a concession dispute. The move spilled over to some commercial banks, its creditors.
This week, volatility of the SET Index is expected to continue with 1,600 points as the major resistance level. Support is set at 1,570 points where the market price to earnings ratio is 14 times.
Issues looming over the Thai exchange this week include the US government shutdown, Brexit and the national election schedule. The amount of new capital will not be sufficient to support a rise in the SET Index, which is not expected to pass 1,610 points.
We do not recommend short-term trading, given the high volatility in prices. However, if the SET Index rises to 1,600 points, it will be a good chance to accumulate stocks with sound fundamentals for long-term investment. Our theme is domestic play and our picks for the week are KBANK, CPALL, STEC, HANA and PLANB. – Therdsak Thaveeteeratham, executive vice president /Research, Asia Plus Securities