Q3 earnings sends SET under 1,600

Q3 earnings sends SET under 1,600

Biggest weekly loss in over five months from range of negative indicators

The Stock Exchange of Thailand (SET) index on Friday plunged below 1,600 points, a nine-month low, marred by concerns over the third-quarter earnings of large listed companies and a dejected economic outlook, both domestically and externally.

Thailand’s benchmark stock index closed at 1,593.28 points, the biggest weekly loss in over five months, down 27.69 points or -1.71% from the previous day’s closing, in turnover worth 76.7 billion baht.

The bourse hit a trough of 1,592.66 points during intra-day trading, the second straight day of sell-offs.

Large-cap stocks experienced a slump, with GPSC shares shedding 3.76%. SCC shares plummeted by 3%, while KBANK shares continued to sink, losing 1.1% after Thursday’s steep plunge that was triggered by the bank’s lower projection of net interest margins and higher bad loan ratio.

On Friday, institutional investors were net sellers of 2.5 billion baht and brokerage firms offloaded 178 million worth of shares.

“Investors are concerned about the earnings reports. Reports from the banking sector so far are not good, with concerns about non-performing loans,” said Teerada Charnyingyong, an analyst at Phillip Capital Thailand.

“Concerns about banking sector earnings will impact other sectors this earning season,” said Ms Teerada.

Investors are faced with a mixed picture of how corporations are coping with slowing growth in the global economy, trade tensions and Brexit.

On the trade front, China fired back at US Vice-President Mike Pence’s criticism on human rights in Hong Kong, calling his speech “lies” and chiding him for ignoring American problems like racism and wealth disparity, Bloomberg reported.

The pound ticked lower as EU diplomats deferred a decision on how long to extend the Brexit deadline until after British politicians vote on Boris Johnson’s proposal for an early general election, according to Bloomberg.

Concerns looming over the Sino-US trade dispute, the Brexit saga and lower GDP growth for Thailand’s economy in 2020 by the International Monetary Fund has also fanned a negative sentiment for investors, said ASL Securities in its note.

An equity sell-off is also a reflection of ebbing investor confidence on domestic investment and economic outlook, said Trinity Securities executive director Nuttachart Mekmasin.

Mr Nuttachart said current stock market earnings do not support the SET index moving up drastically in the coming period.

A disappointing third-quarter earnings performance by SET-listed companies could lead many analysts and securities firms to downgrade their SET index targets for this year, he said.

Therdsak Taweethiratham, head of research at Asia Plus Securities, said investors are worried about Thailand’s banking sector, which indicates growing concerns over the economic outlook, connoted by banks’ loan growth, non-performing loan ratio and non-interest income.

“There is no urgent concern from external factors. Banking and energy stocks have been sold since Thursday. We expect attempts to offload shares from institutional investors,” he said.

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