Market Watch: Stock Exchange of Thailand to absorb recession, state of emergency and relief packages

The Stock Exchange of Thailand (SET) ended positively on Wednesday, up 46.19 points or 4.47 per cent, to 1080.03, representing its first two-day winning streak in over six weeks.  

The SET’s movement is in line with US shares where the S&P 500 also rallied for a second straight day on Wednesday. The S&P 500 and Dow Jones Industrial Average closed up more than 1 and 2 per cent, as investors are now waiting for the US$2 trillion rescue package.

Oil prices reversed earlier losses following the US’s attempt to persuade Saudi Arabia – the largest oil producer in the world – to put a hold on its ongoing oil price war with Russia, its former oil ally. Oil prices are now about half of what they were during the peak in January. 

Still, the world surplus could reach 20 million barrels per day in the next few weeks and we have another five days before the floodgates open. Both Saudi Arabia and the United Arab Emirates said they will start to ramp up production on April 1 if nothing changes before then. Brent crude, the international benchmark, traded at US$26.46 per barrel on Wednesday afternoon, down 2.5 per cent.

The Bank of Thailand’s announcement on Wednesday that the country will go into a recession of 5.3 per cent in 2020 was a shock to many. This will play on SET investors’ minds today on top of the state of emergency that came into effect today. The government has continued to come up with fiscal and monetary measures, but we will have to wait and see if these will be able to continue to shore up confidence in the Thai market on Thursday.

Krungsri Securities see the SET index trading at around 1065-1100 on Thursday. Kingsford Securities see it at 1060-1100. Because of the BOT’s bleak GDP predictions, Capital Nomura Securities said the index’s earnings per share could fall from 80 baht per share down to 60-70 baht per share in 2020. 

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