Investors should keep a close eye on stock movements to determine proper market timing and brace for any impacts from external volatility in the 4^th quarter of 2019, according to the SCB Securities Co., Ltd. (SCBS) research head.

       SCBS Managing Director, Research Group, Mr. Sukit Udomsirikul said concerns about the global economic recession have previously focused on the inverted yield curve phenomenon of US short- and long-term bond yields. Many economic indicators showed the current world economy looking weaker than the economies of 2000 and 2006.

       The US economy is forecast to continue expanding until 2020 and then slow down in 2021, facing a recession the following year. However, with aggressive interest rate cuts by the US Federal Reserve and reduced tensions in the US-China trade war, it is believed an imminent recession is 55% avoidable. And with economic stimulus measures and the relaxation of monetary policies adopted by central banks around the globe, financial conditions, liquidity, and risk-on sentiment are likely to continue picking up.

       Sukit said the company has a positive perspective for local economic direction in 2020. Although macro-economic risk continues to exist, gross domestic product (GDP) is forecast to expand slightly and business-sector operating results are likely to pick up in the first half of 2020, driven by an expected export recovery and an accelerated increase in local consumption and private and state-sector investment.

       He suggested investors find opportunities to shift some of their investment into cyclical stocks upon the release of 3^rd quarter operating results because stock holding volume is now thin and valuations are attractive.

       Value stocks outperforming in September worried investors, since a shift in investment from growth and defensive stocks might push the market downward. Rising oil prices and government bond yield recovery will be key propelling factors, he said, adding that November will be a perfect time for sector rotation.

       For investment strategies in the 4^th quarter of 2019, Mr. Sukit urged investors pay attention to investing in blue-chip and defensive stocks with high liquidity. Sukit still prefers domestic plays with profit growth support and stocks with continued growth stories in the year ahead. Investors should avoid investing in stocks in the property and auto sectors that are affected by a stronger baht and slowing purchase demands. Top picks are those in the industrial estate, medical, commerce, and transport sectors, including: 

• WHA: The company is likely to benefit greatly from state-supported economic stimulus measures because it will boost demand for property for industrial purposes. Rapid e-commerce growth will enhance the demand for logistic warehouses. WHA is forecast to enjoy a compound annual growth rate (CAGR) of 22% for land sales during the next three years, with pre-leased property reaching 200,000 square meters per year. The company also has room for growth in the public facility business and is expected to enjoy strong operating results in the 4^th quarter of 2019. Because of this, the stock price is likely to edge up over the short run.
• BCH: This company is seen as one of the most outstanding stocks in the medical sector given its attractive yield versus risk. The stock price has dropped 6% year to date (YTD), in contrast to the Stock Exchange of Thailand (SET) index rallying by 6% and the CHG surging by 21%, partly due to deteriorating operating performance of its flagship arm World Medical Hospital (WMC). However, BCH profit is believed to have already bottomed out, and it is forecast recovering in the 2^nd half of this year and growing 16% next year, boosted by the improved performance of WMC and the expected operating result turnaround.
• GLOBAL: The company is forecast to continue growing robustly in the 2^nd half of 2019, driven by the positive growth rate of SSS in the 3^rd quarter of 2019 to date (3Q19TD) and continued branch expansion. The company’s profit margin is expected to decline year-on-year, but at a smaller pace than in the first half of 2019 if it manages to adjust inventories completely by the 3^rd quarter of 2019 and early 4^th quarter of 2019. The company’s profits will bottom out in the 3^rd quarter of 2019, recover gradually in the 4^th quarter, and pick up in 2020, bolstered by better profit margins. GLOBAL has become the most laggard stocks in the commerce sector over the past year. It is therefore a good opportunity for an accumulated buy of the stock before profits begin recovering in the 4^th quarter of this year.
• CPALL: The stock is projected to continue outperforming, boosted by expected robust profit growth in the convenience store business in the 2^nd half of 2019 (SSS has a positive growth rate and an increased profit margin), higher profits from counter service business (increased bill payments and banking agent services) and cash & carry business (increased local food prices). The increased number of 7-Eleven shops in Cambodia and Laos will help boost business growth in the long run.

BTS: Negotiations for extending the concession contract of the green electric railway are making good progress. This will help boost the BTS stock price, which has an additional upside gain from the construction of two motorways and the U-Tapao Airport.