Stock market remains weak, investors told to play safe

The weakness is due to concerns about the US Federal Reserve's interest rate hike, Krungsri Securities noted, and recommended that investors focus on a selective buy strategy, targeting prominent stocks such as Siam Commercial Bank (SCB) and GFPT Plc shares.

Foreign net sales have amounted to 110 billion baht since the beginning of the year putting continuous pressure on the SET index. However, due to technical signals indicating oversold conditions, it is expected that the index will rebound.

As for the Dow Jones stock market, investors are cautious and holding back from trading, awaiting the Fed chair's latest statement. Concerns about interest rate hikes and various brokers gradually reducing recommendations for technology stocks have led to a decline in stock prices and significant pressure on the Nasdaq index, which dropped by approximately 1.16%.

Whether concerns about the US interest rate direction will decrease or not depends on the Personal Consumption Expenditures (PCE) data to be released on Friday. The initial consensus estimates that the headline PCE for May will decrease to 4.1% from 4.4%, and the Core PCE will decrease to 4.5% from 4.7% in April. The market will ease concerns and respond positively if the numbers come in lower than 4%.

As for stocks of interest, Krungsri Securities recommends the following:

SCB: It is expected that SCB will continue to achieve strong growth in the second quarter of 2023, driven by expanding loan portfolios and NIM (Net Interest Margin) adjustments in line with the central bank's interest rate policy. SCB benefits directly from its high CASA (Current Account and Savings Account) deposit ratio.

GFPT: The trend of exporting poultry and related products remains consistently good. There is an opportunity to gain market share from Brazil and benefit from the outbreak of avian influenza in that country.