Daily report Tue, Mar 3, 2020 Sawasdee SET SET index Close: 2/3/2020 1,335.72 -4.80 / -0.36% Bt74,369mn SET50 index Close: 2/3/2020 897.96 +0.12 / +0.01% Bt49,436mn Need help from central banks Table of contents Multi-asset price update 2 Market outlook: The SET is expected to rebound today in line with the US and Commodities daily price update 3 European stock markets on investor expectations of central bank easing in Market update 6 monetary policies (BOJ, ECB, the Fed and BOE all meet this month) to mitigate Fund flows monitor 7 Short sales 8 the economic impact from the COVID-19 outbreak. The surge in crude price will Director trade 10 also boost oil-related stock prices - and the market - as traders hope for a Corporate calendar 12 further production cut by OPEC. We assign resistances at 1,368 and 1,382. Graph analysis indicates the SET is still on a downtrend with key resistance at 1,400. SET index movement Market strategy: Net accumulation point is at 1,300, where valuation is 2,000 (pts) PE Band 20.0x attractive. We suggest a mixed portfolio of stocks with a good earnings outlook, 1,900 19.0x 1,800 defensive stocks and laggards: BCH, BEM, BTS, IVL, PTTEP. Today’s picks are 18.0x 1,700 17.0x PTTEP and RATCH. 1,600 16.0x 1,500 15.0x Today’s highlights 1,400 1,300 The SET fluctuated. There was net buy in TRANS and COMM while ENERG, ICT, 1,200 FIN and FOOD saw large net selling. Foreign investors continued to be net sellers 1,100 Jul-16 Jul-17 Jul-18 Jul-19 Jul-20 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20 Apr-16 Apr-17 Apr-18 Apr-19 in the SET (day 8) but institutional investors switched to net buy. In SET50 index Apr-20 futures, foreign investors net longed but institutional investors net shorted. Technical supports and resistances* Both net longed in SSFs. SET50 index future OI and SSF OI decreased. 1382 R2 Today’s touchpoints: 1368 R1 (+) US markets surged: DJIA +5.1%, S&P500 +4.6%, Nasdaq +4.5 as traders 1336 SET expect the Fed to cut policy rate at this month’s meeting so do ECB and BOJ. The IMF is also ready to help member countries respond to the coronavirus. 1326 S1 (+) Crude rebounded, WTI-F +2.0% and Brent-F +4.3%, as hopes of a deeper cut 1307 S2 in output than the 600k bpd expected plus stimulus from central banks to SET index series counter worries about damage to demand from the coronavirus outbreak. Index 2-Mar Chg Chg Value (pts) (pts) (%) (Btmn) Today: Cabinet meeting. Citizens expect the government to enact measures to SET 1,335.72 (4.80) (0.36) 74,369 help them handle the fallout from COVID-19. SET50 897.96 0.12 0.01 49,436 SET100 1,966.02 (3.24) (0.16) 56,091 Investment ideas: sSET 549.42 (9.93) (1.78) 1,443 SETCLMV 777.62 (12.57) (1.59) 18,424 Short-term rebound. The SET will get support from: 1) Monday’s rebound in SETHD 943.15 (8.05) (0.85) 23,925 SETTHSI 817.24 (2.93) (0.36) 43,963 US stock markets (the largest rebound in 11 years for the DJIA) and in Asian SETWB 846.98 0.85 0.10 12,937 stock markets this morning; 2) surge in crude price; 3) possible measures mai 257.80 (3.96) (1.51) 1,131 launched by the cabinet to help people weather the COVID-19 outbreak. Trading summary by investor type However, the market is fragile and extremely reactive to the situation, so we see (Btmn) 2-Mar WTD MTD YTD today’s rebound as short-lived. The SET is still on a downtrend so buying must Foreign Net (4,327) (4,327) (4,327) (41,278) be selective. For short-term speculation, we recommend stocks that benefit Breakdown (%) 41.48 41.48 41.48 39.13 from crude price recovery as traders expect further production cuts at the OPEC Institution Net 2,748 2,748 2,748 (13,514) meeting on Mar 5-6. Recommended stocks are PTT, PTTEP, refineries and Breakdown (%) 10.18 10.18 10.18 12.68 petrochemicals (TOP, BCP, IVL), mixed with high-dividend-yield stocks (PSH, PropTrade Net 106 106 106 (676) RATCH) that are close to XD (we suggest speculating ahead of XD). Investors can Breakdown (%) 11.77 11.77 11.77 13.18 speculate on hotels, airlines and airports (AOT, ERW, RATCH), which are expected Individual Net 1,472 1,472 1,472 55,468 to recover within a day. Breakdown (%) 36.56 36.56 36.56 35.01 Today’s stock picks: PTTEP (S107 R114 C102), RATCH (S59.25 R62.50 C56.50) % of total trade value for each investor type S50 futures trading by foreign investors Today’s reports (Contract) 2-Mar WTD MTD YTD Bank – Cut TPs to reflect the impact of COVID-19 Foreign 1,719 1,719 1,719 34,035 Institution (3,650) (3,650) (3,650) (14,721) BCH – Over-punished: concerns priced in Customer 1,931 1,931 1,931 (19,314) LH – 2019: Sale of assets offset lower housing profit Bond trading by foreign investors TCAP – Another good dividend year (Btmn) 2-Mar WTD MTD YTD What to watch Foreign Buy 3,961 3,961 3,961 162,847 Date Event 2 Mar Economic release: CN – Manufacturing and non-manufacturing PMI for Feb, JP/EU/US – Final manufacturing PMI, CN – Caixin Sell 6,729 6,729 6,729 175,478 manufacturing PMI for Feb, US – ISM manufacturing PMI for Feb Net (2,768) (2,768) (2,768) (12,632) Event: 5G spectrum license granting this month, Effective of February 2020 quarterly MSCI index review. 3 Mar Economic release: JP – Consumer confidence for Feb * SCBS Investment Research estimates Event: US super Tuesday 4 Mar Economic release: CN – Caixin service PMI for Feb, EU/US – Final service PMI for Feb, US – ISM non-manufacturing PMI for Feb, ADP non-farm employment change, crude oil inventories 5 Mar Economic release: US – Unemployment claims, TH – CPI and core CPI for Feb Event: OPEC meetings 6 Mar Economic release: JP – Household spending for Jan, US – Average hourly earnings, non-farm employment change, unemployment rate for Feb Event: OPEC meeting See the end of this report for disclaimer Page 1 Sawasdee SET Multi-asset price update Key indicator update Close 2-Mar WoW MoM YoY YTD Comment: Financial market condition VIX Index 33.42 (16.68) 33.52 77.39 146.28 9.90 • VIX index fell when the US stock markets Europe CDS (bps) 67.033 2.77 18.98 20.79 4.47 (24.52) rebounded as investors hope for an easing LIBOR OIS Spread (bps) 0.35675 12.80 23.06 15.79 16.87 (4.92) in monetary policy to mitigate the impact of TED Spread (bps) 0.275 7.93 15.37 6.21 10.61 (11.33) COVID-19 outbreak on the economy. Exchange rate Dollar Index 97.36 (0.79) (2.01) (0.03) 0.86 0.64 • Gold rose against the US dollar as investors USD/THB 31.40 (0.12) (0.62) 0.66 (1.23) 4.76 expect key central banks to launch EUR/USD 1.12 1.48 2.83 0.74 (1.86) (0.47) economic support measures. USD/JPY 108.01 (0.11) (2.31) (0.46) (3.47) (0.77) Bond: (Change in basis points) • Crude rebounded as investors expect key TH Gov Bond 2Y 0.80% (2.92) (2.26) (28.59) (95.36) (38.93) central banks to launch economic support TH Gov Bond 10Y 1.07% (1.66) 1.77 (23.86) (148.36) (41.65) measures. US Gov Bond 2Y 0.73% (14.50) (53.30) (58.60) (182.80) (83.80) US Gov Bond 10Y 1.07% (6.10) (31.20) (44.00) (168.90) (82.10) Commodities CRB Index 395.11 0.00 (1.02) (2.24) (4.50) (3.79) Gold (US$/oz) 1,591.30 0.56 (3.99) 0.18 23.05 5.05 Gross Refining Margin (US$/bbl) 1.42 0.00 (18.86) n.m. (68.86) (63.02) Dubai Crude (US$/bbl) 51.09 4.70 (6.54) (6.92) (21.08) (20.43) NYMEX Crude (US$/bbl) 46.75 4.45 (9.10) (9.33) (16.22) (3.49) Baltic Dry Index (pts) 539.00 0.75 6.52 10.68 (18.83) (57.59) Thai and US 10-year government bond yield Thai and US 10-year government bond spread 0.4 3.0 (%) (pts) 2.8 0.3 +2SD = 0.25 2.6 0.2 2.4 0.1 +1SD = 0.07 2.2 0.0 UST 10Y 2.0 (0.1) Avg = -0.11 1.8 (0.2) (0.3) 1.6 -1SD = -0.29 1.4 (0.4) (0.5) 1.2 TH GB10Y -2SD = -0.47 1.0 (0.6) Jul-19 Jan-20 Oct-19 Apr-19 Jun-19 Feb-20 Sep-19 Jul-19 Mar-19 Mar-20 Dec-19 Aug-19 Nov-19 May-19 Jan-20 Oct-19 Apr-19 Jun-19 Feb-20 Sep-19 Mar-19 Mar-20 Dec-19 Nov-19 Aug-19 May-19 THB/USD exchange rate Regional foreign exchange rate spot return 33 (THB/USD) +2SD = 32.15 South Korean Won 32 +1SD = 31.54 Taiwan Dollar 32 Philippines Peso 31 Avg = 30.93 China Renminbi Indonesian Rupiah 31 -1SD = 30.32 Malaysian Ringgit 30 Offshore Deliverable CNY -2SD = 29.7 30 Singapore Dollar Hong Kong Dollar 29 Thai Baht 29 Japanese Yen 28 Indian Rupee (1.0) 0.0 1.0 2.0 Jul-19 Jan-20 Oct-19 Apr-19 Jun-19 Feb-20 Sep-19 Mar-19 Mar-20 Dec-19 Aug-19 Nov-19 May-19 (% Change 1 day) Gold Brent crude (US$/Troy ounce) 80 (US$/bbl) 1,650 75 +2SD = 73.35 1,600 +2SD = 1648.92 +1SD = 68.51 1,550 70 1,500 +1SD = 1544.37 65 Avg = 63.66 1,450 60 1,400 Avg = 1439.82 -1SD = 58.82 -1SD = 1335.26 55 1,350 -2SD = 53.97 50 1,300 45 1,250 -2SD = 1230.71 1,200 40 1,150 35 1,100 30 Jul-19 Jul-19 Jan-20 Oct-19 Apr-19 Jun-19 Feb-20 Sep-19 Mar-19 Mar-20 Dec-19 Aug-19 Nov-19 Jan-20 Oct-19 Apr-19 Jun-19 May-19 Feb-20 Sep-19 Mar-19 Mar-20 Dec-19 Nov-19 Aug-19 May-19 Tue, Mar 3, 2020 Page 2 Sawasdee SET Commodities daily price update As of -1W Avg.