SET Index slides as investors dump risky assets for gold
Krungsri Securities has predicted that the Stock Exchange of Thailand (SET) Index will move between 1,480 and 1,500 due to uncertainty in the market following the Covid-19 virus outbreak which has pressured the global economy.
A stock analyst at Krungsri Securities said that the SET Index on Thursday (February 20) fell sharply by 14.30 points or 0.95 per cent to 1,491 with a trade value of Bt76 billion.
“Aside from the impact of coronavirus, investors sold Airports of Thailand (AOT) stocks after approved relief measures for business operators at the six airports. Meanwhile, investors also sold bank stocks due to uncertainty following the economic slowdown and non-performing loans (NPLs),” the stock analyst said.
“Foreign investors made net sales of Bt2.397 billion and Thailand Futures Exchange (TFEX) has 22,014 net short contracts, but foreign investors made a net buy in the bond market of Bt727 million.”
The stock analyst expects that the SET Index will range between 1,480 and 1,500 amid uncertainty among markets following the Covid-19 virus outbreak which caused the global economic slowdown.
“The impact of this outbreak also has caused investors to invest in safe assets which boosted the gold price to the highest in seven years,” the stock analyst said. “Also, it caused an inverted yield curve in 10-year and 3-month US bonds which is a warning sign that an economic recession will occur in the future.”
The stock analyst said that the SET Index would rebound from energy stocks which will benefit from rising oil price and exporter stocks which will benefit from baht weakening to Bt31.5 per US dollar. In addition, the technical signal that the index has weakened near the oversold will help the index to rebound.
“We suggest that investors follow the Constitutional Court verdict on dissolution of the Future Forward Party (FWP) on Friday at 3pm,” he added.
Four types of stocks are recommended:
● Exporters and food stocks, which will benefit from the weakening baht, such as KCE, HANA, DELTA, CPF and TU
● Energy stocks set to rise with the oil price such as PTTEP, TOP and SPRC
● Financial stocks, which will benefit from reduced financial costs after the Monetary Policy Committee cut the interest rate by 0.25 per cent, such as MTC, SAWAD and KTC
● Stocks expected to pay high dividends, such as TISCO, SIRI and LH
In Friday’s morning session, the SET Index fell by 8.60 points or 0.58 per cent, to 1,482.64, with a trade value of Bt20.49.