Market Update: SET up, IVL shares down

The Stock Exchange of Thailand (SET) ended Friday morning’s trading session with 7.01 points more than its opening to reach 1539.78 at intermission, with a trading value of 27.6 billion baht.

The green colour on the board was attributed to rising oil prices as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, are going to cut down their production by 600,000 barrels per day amid the slowdown of demand during the global coronavirus outbreak.  

Internally, the news on the passing of the 2020 fiscal year budget bill by the Lower House on Thursday has added a positive vibe to the Thai market. This development led Krungsri Securities to believe that the index could be trading in the range of 1525-1540, compared to the opening of 1532.77 points.

The news from OPEC+, the parliament’s Lower House, and the upcoming 5G auction this Sunday have led to a surge of shares within the ICT, banking, and energy sectors on Friday morning, said Koraphat Worachet, an analyst at Capital Nomura Seculities. Koraphat added that since the 5G auction is not expected to be extremely competitive, investors are now buying back ICT shares.

We will have to wait and see if the meeting between Deputy Prime Minister Somkid Jatusripitak, the Ministry of Finance, the Ministry of Tourism and Sports, and the Joint Standing Committee on Commerce, Industry and Banking on Friday afternoon will result in new stimulus measures or not. If so, there could be more a positive vibe for the Thai market on Friday. 

One casualty from this morning that went against the market was Indorama Ventures Plc (IVL). The stock took a beating after reports came out that the company was among the 112 companies that have been named by the United Nations Human Rights Office for operating in the illegal Israeli settlements.

The company share price lost 1 baht from the news and was trading at 30.25 baht before going into intermission. 

Looking forward, brokers are pointing to the 5G auction on Sunday and the real GDP announcement by the Office of the National Economic and Social Development Council (NESDC) this coming Monday. Somkid previously commented that the GDP expansion in the fourth quarter of 2019 could be less than 2 per cent. Tisco Securities expect the NESDC to lower their GDP predictions for 2020 to much less than the market consensus of 2.9 per cent right now. 

The Bank of Thailand (BOT) said earlier that its GDP prediction of 2.8 per cent was no longer attainable. There is also a possibility that the economy will expand by only 1.3 per cent in 2020 if the tourism sector loses around 250 billion baht worth of income from the outbreak this year, the central bank said on Thursday.

Another aspect that could afflict the market next week is the Constitutional Court’s decision on whether to dissolve the Future Forward Party, which is scheduled to come out next Friday (February 21).  

For its top picks, Tisco said shares of Tipco Asphalt (TASCO) are looking bright as its profit is expected to grow by 23 per cent this year from the pent up budget and the expected decline in supply within the market. Other producers of asphalt such as S-oil and SK-Energy have both lowered their production targets this year.

Other stocks in focus are shares that will benefit from the passing of the budget bill, including shares within the construction group (STEC, SEAFCO, PYLON, and TASCO) and the industrial estate group (AMATA, ROJNA, and WHA). 

OPEC’s decision to lower its per day production, the implementation of agreements under phase one of the US-China trade deal, and the lessening concerns over the coronavirus outbreak could prove to be a boon for global play stocks such as PTTEP, SPRC, TOP, SCC, PRM, DELTA, KCE, and HANA. Meanwhile, government measures to stimulate the tourism sector could be a boon for shares within the tourism sector as well, especially for AOT, MINT, ERW, and AAV, they added. 

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