Bank shares rebound while defensive shares look bright

Bank shares are beginning to rebound after a poor showing in last quarter’s results. Shares within the “defensive” group – companies that are broadly protected from economic downturns – are also expected to gain, especially hospitals and shares that are benefitting from the weaker baht.

However, the Thai market is still under pressure as a result of the coronavirus outbreak and the risk of the government’s 2020 fiscal year budget being further delayed, says TISCO Research.

Global shares ended yesterday on a mixed note as a result of the outbreak of the coronavirus in China, which has killed at least 25 people and infected at least 800 more so far, according to Chinese health authorities.

The S&P 500 closed modestly higher, up 0.1 per cent, on Thursday after the World Health Organization did not declare a global emergency over the outbreak.

At least six Chinese cities have been placed under quarantine, which has caused shares on the mainland and in Hong Kong to decline. China’s benchmark CSI 300 index was also down by 3.1 per cent – its worst one-day performance since May, while the Hang Seng index fell by 1.5 per cent. 

TISCO Research believes the Stock Exchange of Thailand (SET) has the potential to narrowly drop today as a result of the coronavirus outbreak and the continuous drop in global oil prices.

With the 2020 fiscal year budget in disarray, private consumption has also come under pressure.

Given these situation, TISCO Research recommends that if the SET cannot maintain the 1575 index point, they closed on yesterday, investors should stop and enter a “wait and see” mode.

Shares that would benefit if the 2020 fiscal year budget is given the go ahead, include CK, STEC, SEAFCO, and PYLON.

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