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Sawasdee - Jun 23, 2022

“Worries over higher interest rates pressuring the economy.”

The SET is expected to fall due to concerns on Powell’s statement that it is necessary to raise interest rate to slow down inflation, which will affect the economy. Plus, the sharp fall in oil price will hurt the Energy sector. The supports are at 1,550 and 1,540, and the upside is limited ata resistance between 1,570 and 1,580.

Strategy Today : Even though in the short term the SET may rebound, this is likely to be short-lived, after which it will continue to trend down as there is no real positive that would be strong enough to turn the market around and risks are still high and unchanged. We suggest “selective buy” in defensive stocks and companies whose earnings are clearly recovering.

Weekly portfolio : In the short term there are still risks, therefore we recommend to invest with caution, and to be very selective in defensive stocks with positive drivers: 1) stocks benefiting from an upward trend in interest rates and for which earnings are improving from 2Q22 on both YoY and QoQ – KBANK, BBL, BLA and THREL; 2) stocks that are little affected by the upward trend in interest rates, and whose earnings are expected to improve over the rest of the year – AOT and AWC, and; 3) for investors with high-risk tolerance and interested in stocks whose prices are already down, have good risk/reward and benefit from resolution of the supply chain problem, we recommend looking for opportunity to speculate in recovering stocks –MAKRO and CBG.

Daily Focus :

CBG Aluminium price is trending down, reducing packaging costs. Earnings are expected to bottom in 1H22 and then trend up in 2H22 on a better gross margin after aluminium price peaked in 1Q22, plus the introduction of new products and growth in sales in international markets.

GPSC Momentum in the short term is positive as oil price and bond yield are down; it also benefits from the probable raise in Ft for Sept–Dec 2022, which will compensate for earlier rises in the price of natural gas and improve profit margin.

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