SET index drops due to rising COVID-19 infections and new government measures

The Stock Exchange of Thailand (SET) index fell 22.55 points to 1,428.80 when the market opened on Monday amid economic concerns over the soar of COVID-19 cases throughout the country.

Analysts say that a full-scale lockdown in Bangkok or nationwide is unlikely as Thai authorities are stepping up restrictions to contain the outbreak. However, the situation will initially pose short-term negative consequences to the market.

For the first day of trading in 2021, the SET Index is expected to see a pullback as the local COVID-19 situation deteriorated during the New Year holiday – posing a downside risk to the Thai economy in the first quarter, according to an analyst at KGI securities.

Thai stock market is likely to face “the same index downside level of 1,400 [points], based on 18.2x PE on 2021 EPS at 77.0, which effectively floored the SET Index during December 21-22, 2020, when the initial outbreak in Samut Sakhon province was reported,” said the analyst.

Meanwhile, the bigger picture on EM Asian inflows remains amid hopes for COVID-19 vaccines coming to key countries including Thailand by mid-2021, the KGI analyst says.

“We still recommend a buy on dip strategy and remain positive to the SET Index for the 2021 first quarter horizon.”

Likewise, analysts at Krungsri Securities expect that the index would head down to the level of 1,420 – 1,425 points as an emergency decree has been imposed on 28 provinces, which will hurt economic activities and investor confidence.

The market sentiment is also pressured by tight valuation, the analysts says.

Krungsri suggests selective buy as an investment strategy with strong fourth-quarter profits stocks (PTTEP, PTTGC, TOP, IVL), recovering freight rates (PSL, TTA, RCL), and beneficiaries of the pandemic (TQM, STGT, AJ, PTL, SYNEX, COM7).

As of 11.35 a.m., the SET index stood at 1,437.87 point, down 11.48 or 0.79 per cent, with a transaction value of 33.59 billion baht.


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