Mass sell-offs from negative sentiment over Covid cases pulls down SET
Investors began selling off shares when two Thai returnees tested positive for Covid-19 after completing their 14-day quarantine, causing the Stock Exchange of Thailand (SET) Index to fall by 8.99 points or 0.69 per cent to 1,299.68 at 1pm today (August 20).
As of yesterday, Thailand had been free of domestic Covid-19 cases for 87 days.
Stocks that suffered the highest sell-offs were in the tourism sector, such as hotels, restaurants and hospitals.
Therdsak Thaveeteeratham, executive vice president for research at Asia Plus Securities, said SET risked falling below 1,300 in the short term due to the Covid-19 situation in Thailand, adding that the index will fall to the next support line at 1,280 if the situation worsens.
“Investors sold stocks in response to the new domestic Covid-19 cases that caused uncertainty over whether the situation will worsen,” he said.
However, he said he expects SET to move in line with the Covid-19 situation, adding that the index will rebound to resistance line at 1,330 if the government is able to contain the spread of the disease.
“We advise investors to avoid buying shares affected by the Covid-19 pandemic, such as tourism, service and retail as their price will be pressured by mass sell-offs.
“Meanwhile, we recommend investing in shares that have good fundamentals, pay high dividends and are able to escape the Covid-19 fallout, such as rubber gloves and disease control products,” he said.
Koraphat Vorachet, director of research and investment at Capital Nomura Securities, said the discovery of new Covid-19 cases caused volatility in the stock market, adding that he expects SET to move between 1,270 and 1,300.
“Investors will be panicking because Thailand has been free from Covid-19 for a long time, so we have to follow the situation closely,” he said, adding that this negative sentiment will affect hotels, airlines, airports, restaurants and theatre stocks, though stocks for rubber glove manufacturers and beverages will benefit.
“Investors should be careful at this time because mass sell-offs can occur at any time due to high SET valuation,” he said.
“We advise investors to hold a small proportion of shares or wait to buy stocks when the index falls to 1,250 points.”
He added that the stocks that will escape the abovementioned risks are food export and electronic parts, as well as stocks that pay high dividends.
