SET slumps in reaction to US Fed rate cut

A stock analyst at Krungsri Securities expected the SET Index to move at between 1,100 and 1,150.
“Today, we recommend investors to follow the situation of the Dow Jones Futures Index closely because it is an important indicator for investment in the Thai stock and other regional markets,” the stock analyst said.
He explained that the situation of the Dow Futures will reflect the direct impact from the US Federal Reserve’s announcement of an emergency interest rate cut by 1 percentage point to the lowest in history at zero and revival of the 2008 crisis-era programme of bond purchases known as “quantitative easing” with a limit of US$700 to tackle the situation arising from the new coronavirus outbreak.
“In the short term, the Fed’s emergency interest rate cut would cause negative sentiment because investors would think that this outbreak might affect the global economy more than expected, while the Fed might not have other tools if this measure cannot cope,” the stock analyst said.
“However, in the long term, we foresee that this measure would support the economy when money enters the system and turn to positive sentiment in money and capital markets due to increase in liquidity.”
The analyst recommended three groups of stocks for investors:
● Defensive stocks which pay high dividends, such as ADVANC, INTUCH, and TTW.
● Retail stocks, which gained buying power after the government returned the electricity metre insurance for a total of Bt30 billion, such as CPALL, HMPRO, and BJC.
● Financial stocks, which gained benefit from interest rate cut trends, such as MTC, SAWAD, and KTC.