SET expected to be highly volatile after declaration of emergency
The government's decision to declare a state of emergency to deal with political rallies is causing high volatility in the Stock Exchange of Thailand (SET), an analyst at Asia Plus Securities pointed out.
After protesters surrounding Government House dispersed and announced they would continue rallying, the government put Bangkok under emergency in a bid to control the situation.
An Asia Plus Securities analyst said SET’s condition when the state of emergency was declared the last four times – Black May in 1992, People's Alliance for Democracy's protest in 2006, United Front of Democracy Against Dictatorship's protest in 2010, and People's Democratic Reform Committee's protest in 2014 – has been studied and compared.
"We learned that the SET Index experiences high volatility in the short term once the state of emergency is declared, before rising gradually in the next phase,” he said.
He said the SET Index is expected to fluctuate from minus 7.35 per cent to plus 11.17 per cent in the first two weeks after the announcement. It should then rise by 40.7 per cent after a month of the imposition of emergency, then by another 5.69 per cent in two months and 8.21 per cent in three months.
He advised investors to hold 25 per cent of their funds in cash to cope with market volatility and invest 75 per cent in small- and mid-cap stocks that pay high dividends, as well as stocks that are will not be affected by the political unrest.
