Thai stocks slump on sharp increase in US Covid-19 cases

The SET nearly used the circuit breaker after the index opened trading and fell almost 8 per cent due to the sharp increase in the number of confirmed Covid-19 cases in the US, causing uncertainty following the global economic recession.
A stock analyst at AIRA Securities expected the SET Index to fluctuate on the downside, while forecasting the support level from 1,100 to 1,070 and resistance level from 1,165 to 1,185.
“The market gained negative sentiment from the decline in global stock markets after the number of confirmed Covid-19 cases in the US increased to 38,200, up 5,681 cases or 20.9 per cent, causing worries of a global economic recession,” the stock analyst said.
The analyst said that the market would gain positive sentiment from central banks in many countries relaxing monetary policy and issuing measures to deal with the Covid-19 impact.
“The Bank of Thailand March 20 cut the policy rate by 0.25 of a percentage point to 0.75 per cent from the previous 1.00 per cent,” the stock analyst said.
“We expected that the market had already responded to this positive sentiment, but it would limit the recovery in banking stocks.”
The analyst expected that the Bangkok Metropolitan Administration (BMA)’s move to close department stores and markets in the capital, as well as asking the private sector to allow employees to work from home would cause a short-term negative sentiment on department store and electric train stocks, while it would benefit retail stocks.
“The government’s move to issue measures to mitigate the impact may pressure the Thai economy in the short to medium term, but the market has a chance to recover in the short term,” the stock analyst said.
The analyst advised investors to follow the oil price war between Saudi Arabia and Russia closely after the US signalled it would intervene in the matter.
“We expect that this factor would cause fluctuation in crude oil price during this period, resulting in volatility in energy stocks and the Thai stock market,” the stock analyst said.
“Also, we suggest following the Covid-19 situation in Thailand after the number of confirmed cases rose sharply in the previous week, expecting to pressure the country’s economy and the market in the next period.”
The analyst recommended medium and long term investors who are able to take high risks to gradually buy value stocks that have high competitiveness, pay dividends continuously and whose price has dropped below reasonable price.