TISCO Securities Advises Investors to Gradually Sell Stocks to Secure Profits Amidst Price Increases
September 5, 2023 (17:02) – In light of strong price increases, TISCO Securities is advising investors to gradually sell stocks in order to lock in profits. Analysts have identified a trend of further profit reductions in listed companies, driven by low economic growth and unrecovered exports. Additionally, the delay in payment of the 2024 budget is expected to prevent stocks from surpassing the 1,600 point mark.
According to Mr. Apichart Phobanjerdkul, CISA Senior Director of the Strategic Analysis Division at TISCO Securities Co., Ltd, it is crucial to monitor whether the US Federal Reserve (FED) will change their future policy rate trend, specifically the Dot Plot. In June, the FED predicted that interest rates would be at 5.6% this year, dropping to 4.6% in 2024 and 3.4% in 2025. If the FED tightens its interest rate outlook, it could have an impact on global stock market volatility, particularly in developed markets where stocks have shown strong recovery and are currently trading at higher valuation levels than their long-term average.
Looking ahead at the government establishment timeline, TISCO Securities expects a new government to be formed by the end of September. However, this delay will also affect the 2024 budget, resulting in at least a three-month economic impact. The Center for Analysis and Economic Strategy TISCO (TISCO ESU) predicts that the economy will be impacted by approximately 0.2-0.8%, mainly due to a reduction in government spending, particularly in investment.
Examining the stock market impact of budget delays, TISCO Securities analyzed the movement of the Thai stock market from the end of 2019 to the beginning of 2020, during a 5-month budget delay for the year 2020. It was found that the SET Index experienced a downward trend, with a negative return of -7.5% or an average monthly return of -1.9%, primarily due to the COVID-19 pandemic’s impact in February.
Furthermore, TISCO Securities views the Thai economy as having a higher downside risk than the market estimate of +3.6% due to the weak export sector. Additionally, the delay in the 2024 budget is expected to affect government spending, leading TISCO Securities to believe that overall market profit estimates are at risk of further reductions. Consequently, the positive influence of government institutions is not substantial enough to push the SET Index above the 1,600 point mark.
Given TISCO Securities’ analysis of the Thai stock market, the likelihood of upside is limited. Therefore, they recommend a selective buying strategy focusing on stocks that meet three criteria: (1) stronger profits in the second half of the year compared to the first half, (2) current stock price below fair value by more than 20% based on fundamental factors, and (3) short-term positive factors such as the ongoing recovery of tourism, domestic consumption expansion, and economic stimulus-driven initiatives by the government. TISCO Securities recommends stocks such as BDMS, CENTEL, CPAXT, DMT, MENA, SISB, and TU for investment consideration.
In terms of technical levels, the SET Index has support levels at 1,550-1,560 points and 1,520-1,530 points, with resistance levels at 1,580 points and 1,600-1,620 points.
Source: TISCO Financial Group
Economy/MoneySeptember 5, 2023 17:02
TISCO Securities advises investors to sell stocks gradually to lock in profits during strong price increases. Analysts point out that there is a tendency to further cut the profits of listed companies. low economic growth exports have not recovered yet. And there is a delay in paying the 2024 budget, making it difficult to put pressure on the stock beyond 1,600 points.
Mr. Apichart Phobanjerdkul, CISA Senior Director Strategic Analysis Division TISCO Securities Co, Ltd revealed that TISCO Securities recommends monitoring whether the US Federal Reserve (FED) will change the future policy rate trend (Dot Plot) from the original in June when the FED looked at the end of interest rates. It will be at 5.6% this year and will drop to 4.6% and 3.4% in 2024F and 2025F, respectively, if the FED tightens its interest rate outlook. affecting global stock market volatility In particular, stocks in the developed market (DM) have recovered quite well this year. And the current valuation level is higher than the long-term average.
about the government establishment timeline from now on TISCO Securities expects to have a new government at the end of September. This causes the 2024 budget, which starts on October 1, to be delayed by at least three months in terms of economic impact. According to estimates from the Center for Analysis and Economic Strategy TISCO (TISCO ESU), the impact on the economy is expected to be around 0.2-0.8%, mainly from a reduction in government spending, especially investment spending.
in terms of the impact on the stock market From the study of the movement of the Thai stock market at the end of 2019 until the beginning of 2020, where there was a delay of 5 months when considering the budget for the year 2020, it was found that the SET Index goes to the side down. Regardless of February’s returns, which were hit hard by the COVID-19 pandemic during the budget delay, the SET Index delivered a negative -7.5% or -1.9% monthly average.
In addition, TISCO Securities sees the Thai economy this year as a downside risk than the market estimate of +3.6% from the still weak export sector. And government spending is expected to be affected by the 2024 budget delay, so TISCO Securities sees overall market profit estimates still at risk of further cuts. As a result, the positive factor of the government institution is not a weight, pushing the SET Index to exceed 1,600 points easily.
With TISCO Securities looking at the Thai stock market, there is little chance of upside. TISCO Securities therefore uses a selective buying strategy on stocks that have all 3 components as follows: (1) Profits in the second half of the year tend to be better than the first half (2) Price has the current stock side of fair. values based on fundamental factors of more than 20% and (3) there are short-term positive factors such as the continued recovery of tourism, the expansion of domestic consumption and the economic stimulus-promotion of the country by the government, etc. Stocks in question recommended by TISCO Securities in September are BDMS, CENTEL, CPAXT, DMT, MENA, SISB and TU.1,550-1,560 points and next support at 1,520-1,530 points and importantly resistance at 1,580 points and next resistance at 1,600-1,620 points , respectively.
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