SET yet to recover, baht down, while political pressure rising

The Stock Exchange of Thailand (SET) took a slight hit from the World Health Organization (WHO)’s declaration of the coronavirus as a ‘global emergency,’ as expected.

With 14 cases, Thailand has the largest number of infections outside of China so far, which will affect income from tourism this year. According to the University of the Thai Chamber of Commerce (UTCC), the country will lose around 80-100 billion baht worth of income because of the outbreak, reducing its GDP by at least 0.5 to 0.7 per cent this year.

Apart from the outbreak, the economy is also facing headwinds from rising air pollution, the worst drought in 40 years, the delay of the 2020 fiscal year budget bill, and a strong baht. The concern over the latter is, however, dissipating as the baht is depreciating rapidly, to the point that the concern over the speed of the depreciation has now replaced concerns over its strengthening.

After the biggest drop this year by more than 45 points on Monday – partly because of the outbreak – the SET has gone down by 3.54 per cent from the beginning of the year to date. Concerns over the Thai economy means that foreign investors have now become a net seller, having sold 1.27 billion baht worth of shares in the last six days. 

The index went down yet again yesterday because of concerns over the new coronavirus and the rise of the death toll in China. Concerns over the outbreak today were more linked to the WHO’s declaration. The SET was slightly down by 2.48 points, or 0.16 per cent, at 1521.51 during this morning’s session. 

The baht closed at 31.10 baht yesterday, making it the worst performing currency in Asia so far, as Thailand has taken the biggest hit from the outbreak outside of China. It has rapidly depreciated from around 30 baht at the beginning of the year to its lowest in seven months at 31.28 baht during one point yesterday. The currency slightly picked up to 31.10 this morning as the US dollar is depreciating from the US’s weak economic situation. However, the Kasikorn Research Center still sees the baht in the range of 31-31.2 per US dollar today. 

With concerns over the strong baht dissipating, concerns over political tensions have come back with the news that six opposition parties have filed a no confidence vote against the government this morning.

Tisco Research said the reason WHO’s announcement only slightly hit the SET today was because the market had already absorbed a lot of the news about the outbreak by now, but they will continue to monitor the situation. At the same time, many listed companies including KBANK, CK, SPALI, add TPIPL have announced that they would buy back their shares, which should encourage the buying sentiment for other shares with good fundamentals and lowered prices. These include BBL, SCB, AP, PSH, and QH, the research house noted. 

SCB Securities meanwhile expects the SET to recover in tandem with US markets overnight, where US stock markets started paring losses in the last hour of trading after the WHO declared a global emergency, but said China had the situation under control. 

For the SET, SCB Securities has assigned resistances at 1,535 and 1,547. However, the SET is expected to “wobble” as the coronavirus continues to spread, it said while assigning support at 1,510-1,515. They said the support at 1,500 is a good point at which to accumulate and they are suggesting a mixed portfolio of stocks with a good earnings outlook, defensive stocks, and laggard plays including BDMS, BTS, EA, IVL, and PTTEP. 

For SCB Securities, its picks today are AOT and BTS, while Tisco Securities’ fundamental pick is PLANB as they believe that the market was too panicked over the news of Worawi Makudi, President of the Football Association (FA) of Thailand. 

PLANB’s shares went down by 9.85 per cent yesterday because of the news that Mr. Worawi, who was suspended by FIFA, might give a personal nod for the company to manage FA Thailand’s benefits. The company however insists that they have done everything according to the rules and believe that they will be able to continue contact with the FA.

PLANB’s shares have recovered today by 6.15 points (3.36 per cent) as of 1:50pm, in line with what Tisco Research believe, that even without the contract the company will still post a profit this year.

KGI Securities (Thailand) also said that the claim made against the management of FA Thailand, which refers to the contract signed with PLANB, has not been concluded and the revenue contribution from sport marketing is still small for the company. KGI maintains its 2020 earnings forecasts for PLANB at 1.1 billion baht, or 47 per cent, an increase year-on-year with a target price of 11.4 baht.

*Correction: the original article stated that there were 18 cases of coronavirus in Thailand. It was 14 as of January 31 (morning), and 19 cases as of January 31, at the end of the day.

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