SET below 1500

The Stock Exchange of Thailand (SET) dropped below the psychological mark of 1500 points yesterday, its lowest in three years and two months, from concerns over the impact of the outbreak of the new coronavirus on the global economy.

The SET closed at 1496.06 points yesterday, down 18.08, or 1.19 per cent, with a trading value of 53.18 billion baht, the lowest closing since November 2016. Jitra Amorntham, chief analyst at Finansia Syrus Securities, said the main index came down in line with other bourses in the region, as Chinese markets plunged yesterday when investors first got the chance to react to the outbreak. 

The Shanghai Composite (SHCOMP) took a 7.7 per cent dive, while the Shenzhen Component Index fell 8.5 per cent on their first day of trading after an extended Chinese New Year. They had been closed since January 24. The combined losses wiped out more than US$445 billion in market value. 

However, the Thai market should have dropped by only 5 to 6 points instead of 18 points since the market had absorbed the news of the outbreak earlier than its Chinese peers, Jitra noted. 

The drop in the Thai market yesterday was led by concerns over the impact of the outbreak on the Thai economy and its consumer side. The concerns led retail shares down, with CPALL and CPF down by 3.89 per cent and 6.67 per cent respectively. PTT, CPN and BDMS were also part of the pull down. 

The baht, meanwhile, was trading at a lowest of 31.27 baht per US dollar yesterday before it came back up to close at 31.08 baht against the greenback. Jitipol Puksamatanan, an investment strategist at SCB Securities believes that the fluctuation of the Thai baht is due to low liquidity at the moment, but some investor groups are also preparing for investment in new initial public offerings as well. 

Jitipol believes the baht will continue to fluctuate but in a narrower margin today. In the coming period, he recommends investors keep an eye on the number of visitors and exports, since the baht could still appreciate this month if the outbreak is quickly resolved and the impact has not worsened. 

With oil prices having fallen more than 2 per cent on Monday, WTI dropped by 2.8 per cent down to US$50.13 per barrel, the lowest since January last year. Jitipol sees the baht to be trading in the range of 31.00-31.15 baht per US dollar today. Krungsri Bank sees the baht in a weaker range of 31.00-31.50 baht today. 

Today and this week

Jitra predicts that the SET should be able to climb back above 1500 points as there are factors that could bring it back up this week, including the cabinet meeting today and the Bank of Thailand’s Monetary Policy Committee (MPC) meeting tomorrow. She believes that the MPC might cut the country’s policy interest rate by 25 basis points tomorrow to help support the economy.

Another piece of news that could give some positive sentiment to the bourse is the 5G auction, with private players ADVANC, DTAC, and TRUE, and public players TOT and CAT waiting in line for their bid. For ADVANC, the company is scheduled to announce its fourth quarter results this week and Finansia believes that its profit will be less than the third quarter of 2019 due to rising oil prices and expenditures for its 30-year anniversary. They also assigned resistances for the SET at 1515 and 1495 points today. 

The cabinet will today hear proposals for stimulus measures, which could include the extension of the payment period for personal income tax by another three months and measures to support the tourism sector. 

Stock by stock 

Trinity Securities picked hospital shares for today as the group usually outperforms other shares in time of outbreaks, including BDMS and BCH. They also picked shares of financial institutions that are not related to the outbreak, with opportunities to buy strong shares whose prices have already come down, such as BAM. In the food industry, they picked CPF. Shares in the food industry should also pick up from the weakening of the Thai baht. 

KGI Securities saw good opportunities in shares in the export sector this month, including CPF, HANA, and TU from the weakening of the Thai baht. Next are shares in the construction sector, including CK and STEC, which should benefit from the passing of the 2020 fiscal year budget bill, and which should be resolved sooner rather than later. Other picks for this month include TISCO, which has less risk than other banks from the expected cut of the policy interest rate. 

ADVANC is expected to gain a profit of 8.23 billion baht in its fourth quarter of 2019, which would represent a 20.3 per cent growth. Brokers still have not taken into account the lawsuit with TOT, which could take up to five years to resolve. ADVANC-DTAC-TRUE-TOT-CAT will make their bids for the 5G auction, which will begin on February 16. 

King Power has won all the duty free pick-up counters at Suvarnabhumi and Don Mueang Airports. 

ITEL has set a revenue target of 2.4 billion this year with backlogs that are waiting for booking, worth 4.68 billion baht. They are waiting for the arrival of the 5G connection this year in order to invest in Thailand and abroad.

IHL expects more than 20 per cent in its profit this year as they have received an order from KEEN. IHL also expects four new clients this year.

PPS aims to increase its backlog from the current 400 million baht via new partnerships this year with a profit target of 10 per cent in 2020.

RS expects a new management team, which was instituted this month, to boost their revenue to 5.25 billion baht this year.

Correction: This article previously misstated by how much the MPC might cut the country’s policy interest rate. It may be cut by 25 basis points tomorrow, not 0.25 points as previously stated.

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