SET Index recovers after a 4% dip in intra-day trade amid speculation and profit-taking

The Stock Exchange of Thailand (SET) remained volatile at closing on Thursday as investors speculated on market rumours and the rising number of Covid-19 cases.

The SET Index ended the day at 1,548.13 points down 23.72 points with more than 143.41 billion baht moving in trade. The daily floor occurred around 15:50 when the market dipped by 70.83 points to move to 1,501.13

“There are couple of reasons for the market to fall and one of them is the fact that the number of Covid-19 cases today was way beyond anybody’s expectations,” said analyst with a leading brokerage house.

Compounding the market dip was lower than expected reported first-quarter earnings by major corporations

Historically, May has been a selling month for the SET but 2021 has proven different with markets climbing on the back of IPOs. The gains made over the past month took a hit on Thursday.

“If you look at the earnings you will see that even the companies considered to be doing good during bad times such as CP All reported earnings of 2.59 billion baht down 54 per cent year-on-year and 27 per cent quarter-on-quarter. The results were 39 per cent below the market’s expectations.

Both CPAll and Berli Juker Plc (BJC) reported poor 1Q sales – 2Q which were worse.  This means local consumption stocks are overvalued.

CPALL ended the day at 58 baht down 2,75 baht or 4.53 per cent.

The dip in CPALL erased 2.2 points out of the 23.72 points fall the SET Index fell today.

Tech Sell Off & Retail Investors

The ongoing selloff in the technology stocks globally also saw some run-on effect in Thailand with the likes of Delta Electronics Plc (DELTA) witnessing a selloff that wiped 74 baht off the shares prompting the shares to end at 484 baht apiece, and in the process also account for nearly 10 points retraction in the SET Index’s 23.72 points.

The technology stocks sell off has been a global phenomenon and shares in the sector were on the selling spree in Thailand today as well.

Krungsri Securities in their daily notes to clients had flagged last month that rarely in past many year, both domestic and foreign funds are sellers of Thailand at the same time (see chart below).

Retail investors had been supporting the market – and now they are scared with uncontrollable Covid-19 infection as the numbers continue to rise it could jeopardize the lockdown and delayed foreign tourists will prolong the recovery.

To make matters worse, companies that benefited from the Covid-19 such as TMQ, COM7, and DELTA also reported unexciting rise in 1Q earnings – creating impression that earnings peak is reached.

Even the energy companies and chemical companies reported good recovery in 1Q – most of which came from inventory gains  led by rising oil price – it cannot be repeated.

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