Investors should keep a close eye on stock movements to determine proper market timing and brace for any impacts from external volatility in the 4th 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 3rd 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 4th 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:
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.