The Driving Factors behind the SET Index and China’s Economy
Government Policies and Speculation
Government policy announcements play a significant role in shaping the driving forces behind the SET Index. These policies have the potential to create excitement and speculation within various industry groups. Past policies, such as the introduction of a 10,000 baht digital wallet or reduced prices, have generated speculation in sectors like retail, finance, food, and tourism. However, it should be noted that the implementation of these policies is not always straightforward and can have long-term financial implications. Therefore, while speculation may arise, obstacles in policy execution can lead to strong selling pressure and the need for cautious decision-making in stock trading.
The Volatility of the SET Index
The SET Index is expected to experience volatility and frequent changes in play groups. Currently, the evaluation ranges from 1540 to 1554 points, with government policy announcements serving as a backdrop for market trends. Top pick stocks in this period include BGRIM, SCGP, and TRUE.
The Chinese Economy and the Tech War
China’s economy is showing signs of improvement, particularly due to recent measures focused on domestic consumption and efforts to address issues in the real estate sector, which accounts for a quarter of China’s GDP. Important economic indicators, such as the manufacturing sector’s PMI, import-export figures, and inflation rates, have displayed positive trends. However, the Tech War between China and the United States remains a threat. Relations between the two countries have deteriorated, impacting the import of semiconductors from China to the United States. Additionally, China’s plan to expand the ban on iPhone use in government agencies raises concerns about escalating tensions.
Overall, the Chinese economy is moving in a positive direction, but the risk of the Tech War intensifying should be monitored closely.
The Impact of Commodity Prices
The prices of various commodities have experienced significant increases since the beginning of September 2023, driven by the recovery of downstream industries in domestic and international markets. This surge in demand has created investment opportunities within specific stock groups:
- Freight rates have risen, benefiting logistics stocks like PSL, TTA, WICE, III, and SJWD.
- The price of rubber blocks/sheets has increased due to expectations of government measures stabilizing rubber prices. Stocks in the rubber export sector, such as STA, TRUBB, and NER, are anticipated to benefit.
- Sugar prices have risen as the Indian government plans to implement an export ban. Stocks in sugar exporting groups like KSL and KTIS are expected to perform well.
- BRENT WTI prices have increased due to concerns over tight oil conditions from OPEC+. Oil stocks, including PTT, PTTEP, IRPC, SPRC, and TOP, are likely to benefit from this trend.
Investors are advised to focus on stock groups aligned with these commodity price trends for potential returns.
The Role of Government Policy in Stock Market Volatility
The stock market in Thailand has experienced low trading values and a lack of momentum recently. This is partly attributed to government policies, which can significantly impact market performance. While previous policies have generated excitement and speculation, their implementation is not always smooth and can affect the financial and fiscal situation in the long term. Factors such as the introduction of a 10,000 baht digital wallet, 20 baht electric train fares, and debt suspension have the potential to create speculation in various sectors. However, if obstacles arise, strong selling pressure may occur. Investors should exercise caution when trading stocks that were previously speculated upon, as partners involved may adopt a “Buy on Fact” strategy.
Amidst government policy announcements, the SET Index is expected to experience volatility, and play groups may change rapidly. The Chinese economy shows positive signs of improvement, but the Tech War between China and the United States poses a significant risk. Commodity prices have surged, creating potential investment opportunities within specific stock groups. The impact of government policies on the stock market should be closely monitored. Overall, cautious decision-making and analysis are crucial in navigating these volatile market conditions.
Among the issues that will affect the driving of the Index during this period are: Government policy announcements are a subject of interest because many policies have succeeded in creating excitement and creating a trend of speculation in stocks in many industrial groups in the past. But on the other hand, it is seen that the operations are carried out according to It is not easy and can have an impact on the financial situation in the long term, whether it is issuing a 10,000 baht digital wallet, a 20 baht train ticket electricity throughout the line, or reduce prices. Diesel-Electric Including debt suspension etc. All this if it really happens in the short term. It will create speculation in many groups such as retail, financial institutions, food, tourism, etc. However, if there are obstacles There may be strong selling pressure to make a profit. In addition, you may need to be careful of selling facts in stocks assumed in the previous round, while partners considered to be at a disadvantage could have a Buy position on fact.
The SET Index is expected to be in a volatile state. And there was a change in play groups quite quickly. Today, we are evaluating the range of 1540 -1554 points with the government policy announcement as the background. Top Pick stocks are BGRIM, SCGP and TRUE.
The announcement of additional measures to stimulate the Chinese economy since the end of July 2023 has mainly focused on domestic consumption. along with speeding up the process of solving the problem The real estate sector accounts for a quarter of China’s GDP.
The engine that drives the economy gradually make the overall picture of China There is a better direction in August, as reflected by important economic figures that came out higher than expected, such as PMI for the manufacturing sector, totals import-export, etc., and China’s inflation rate (CPI) recently came out at +0.1 YoY, as expected, increased by -0.3% from the previous month, which helped reduce pressure. from deflation In addition, producer side inflation (PPI) was -3.0% YoY, contracting less than market expectations and last month at -3.1% YoY and -4.4% YoY, respectively .
Although the Chinese economy looks more stable But there is still a risk of the Tech War between China and the United States which could intensify. Looking back at past data, it was found that the share of imported products related to Semiconductors from China in the U.S. There has been a continuous downward trend since the U.S. announced a trade war with China in 2018, and the Chinese government has recently planned to expand the ban on iPhone use to cover government agencies. supporting state enterprises while working or carrying them into government offices (previously only prohibited by central government officials)
Summary: Overall, the Chinese economy in August has a better direction. After the Chinese government announced additional measures to stimulate the economy from the end of July 2023, whether in the production sector, the trade sector, and most recently the consumption sector which has positive signs, helping to reduce the pressure on the stagnant economy. However, you still need to be careful of the risk of the Tech War that could intensify.
Commodity prices have increased sharply for almost all types. There are benefits to speculating on group stocks.
Since the beginning of September 2023, the prices of almost all types of goods or commodities have increased sharply due to the recovery of downstream industries in the domestic and international markets, driving demand to increase significantly during 2H23 onwards, with details of each type as follows:
• Freight rates (BADI) increased 9.2% (mtd), which is good for Logistics stocks like PSL TTA WICE III SJWD, whose performance during 2H23 has a better chance than 1H23 of entering the group’s high season this of stocks.
• The price of rubber blocks/rubber sheets increased by 3.5%-6%(Mtd) on strong expectations. Supplementary measures by the government to maintain stability in rubber prices. Good for rubber export stocks like STA TRUBB NER
• Sugar prices rose 5% (mtd) as the Indian government prepares to announce an export ban. Sugar next season (October 2023), which is the world’s largest sugar exporter, will support a reduction in supply, which is good for stocks in sugar exporting groups like KSL and KTIS.
• BRENT WTI rose 4.3%-4.6%(mtd) on concerns about tight oil conditions from OPEC+, which is good for oil stocks like PTT (BK:) PTTEP IRPC SPRC TOP.
Summary: The price of commodities has increased sharply since the beginning of September 2023 and has continued to gain momentum from demand that has an opportunity to recover and supply that has reduced Investment strategy Focus on groups of stocks that benefit from issues of the type, such as III SJWD STA NER KSL PTTEP TOP etc.
A period driven by Government Policy
as of last Friday Thailand’s stock market has a daily trading value of just 35 billion baht (down more than 28% compared to the average trading value in the past two weeks), consistent with a lack of momentum new in the Asian stock market. Pressure on the trading value in many places to be light or down 20% compared to the average trading value during the same period.
In addition, the SET Index has recovered strongly and rapidly. During the transition period with the new government from 1506 up to 1579 points, a gradual profit from foreigners began to be seen in September Foreigners sold Thai stocks over 6.8 billion baht every day, putting pressure on the SET The latest Index fell to 1547 from points.
As for the issues that will have an impact in shaping the SET Index this week, they include government policy announcements. The reason is the focus Because many policies can create excitement and create speculation in stocks in many industry groups in the past, but from another point of view, it is seen that the implementation of the plan is not easy and could have an impact on the situation financial and fiscal. , whether it gives a 10,000 baht digital wallet, electric train fares of 20 baht throughout the line, reducing the price of diesel and electricity, including debt suspension, etc. All this, if it really happens in the short term, creates speculation in many groups such as retail, financial institutions, food, tourism, etc. But, however, if there are obstacles There may be strong selling pressure to make a profit. Additionally, you may need to be careful when selling facts in stocks that have been speculated in previous rounds. while partners who are considered to have broken Benefits can arise from a Buy on Fact situation.
Summary: The SET Index is expected to be in a volatile state. And there was a change in play groups quite quickly. Today, we are evaluating the range of 1540 – 1554 points with the government policy announcement as the background. Top Pick stocks are BGRIM, SCGP and TRUE.
This article was originally published on the ASIA Plus Securities website.
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